- Coinbase Temporarily Suspends ETH Staking Rewards Payouts.
- The Largest Cryptocurrency Exchange in the United States cited a “minor technical issue”.
- Coinbase Assures Users as It Investigates the root cause of the problem to find a speedy solution.
In an unforeseen turn of events, Coinbase, a leading cryptocurrency exchange, has temporarily suspended the payout rewards for its Ethereum (ETH) staking service. The suspension, announced on May 16, is a direct result of a minor technical glitch that Coinbase promptly addressed.
The exchange took swift action to reassure its users, stating unequivocally that the rewards are still accumulating and will be appropriately disbursed once the issue has been resolved.
Highlighting in its incident report, Coinbase said:
“The issue has been identified. We are working on a fix to resolve within the next 48-72 hours to resume staking reward payouts.”
Coinbase’s staking service allows users to deposit ETH and other proof-of-stake cryptocurrencies, which are then used to secure their respective blockchains and earn additional crypto rewards. It offers a unique advantage over similar services. Users can deposit their ETH and earn staking rewards, currently at a rate of 6%. The appeal of Coinbase’s ETH staking service lies in its accessibility; it stands apart in the market by not requiring the industry-standard minimum of 32 ETH to commence staking.
The suspension of ETH is not related to regulatory issues.
It’s worth noting that the crackdown on cryptocurrency staking services by U.S. regulators has added to the challenges faced by exchanges. In February, the SEC fined Kraken $30 million for operating an unregistered staking service, leading to its shutdown before ETH staking withdrawals were even enabled. While Coinbase has not faced formal charges, it received a Wells Notice from the SEC in March, warning of possible securities violations related to its staking service.
Coinbase has been vocal in its defense, asserting that staking does not constitute a securities offering and expressing a willingness to fight the SEC in court if necessary. The company has even sought clarification from the court regarding crypto asset regulations, a request that the SEC has attempted to dismiss.
To clarify, Coinbase emphasized that the suspension of ETH staking rewards is unrelated to any regulatory or legal issues. However, the exchange did not disclose the exact nature of the technical problem or why it would take 48-72 hours to resolve.
The Influx of ETH Deposits Raises Questions About Coinbase’s Staking Services
Coinbase has recently seen a significant influx of ETH deposits, with over 53,400 ETH being deposited, including a substantial withdrawal of 44,000 ETH from the cbETH deposit address. This surge in activity has raised questions about the reliability of Coinbase’s staking services, especially considering a previous incident where ETH rewards became stuck due to a lack of support for external validator ETH addresses.
Despite these challenges, the recent Shapella upgrade has brought positive implications for ETH holders, offering increased flexibility in managing their assets. The upgrade has also enhanced the scalability and security of the Ethereum network, making it more appealing to developers and users and potentially driving greater adoption of ETH.
While the exchange works to resolve the problem, users can rest assured that their rewards are still accumulating. Coinbase expects to resume regular operation and distribute the dividends within the next 48-72 hours.