Brian Armstrong, CEO of Coinbase, has weighed in on continuing discussions about Ethereum’s capacity to resist censorship while using Proof-of-Stake.
According to Brian Armstrong, if Coinbase had to decide between upholding the integrity of the Ethereum network and complying with regulatory demands to censor transactions, it would favor the protocol.
The CEO of the American cryptocurrency exchange responded to a hypothetical question on Twitter on Thursday by stating that the company would rather shut down its staking service than adhere to any future legal obligations to censor Ethereum transactions at the network level.
“If regulators ask you to censor at the ethereum protocol level with your validators will you: A) comply and censor at the protocol level, [or] B) shut down the staking service and preserve network integrity” Rotki founder Lefteris Karapetsas wrote in a post tagging some of the largest Ethereum token stakers, including Coinbase.
Responding to the question, Armstrong said:
“It’s a hypothetical we hopefully won’t actually face. But if we did we’d go with B i think. Got to focus on the bigger picture. There may be some better option (C) or a legal challenge as well that could help reach a better outcome.”
Armstrong’s remarks come amid a heated discussion about the potential potency of Ethereum’s censorship resistance following its planned “Merge” upgrade to Proof-of-Stake, which is set to launch next month.
After the Ethereum-based privacy protocol Tornado Cash was sanctioned by the Office of Foreign Assets Control of the U.S. Treasury Department last week, the discussion got underway. Alexey Pertsev, the creator of Tornado Cash, was detained by Dutch authorities a few days later on suspicion of “concealing unlawful financial transactions and assisting money laundering.”
Numerous well-known U.S.-based cryptocurrency companies immediately complied with the sanctions, preventing users from accessing the website and blacklisting Tornado Cash-related addresses. These companies include crucial blockchain infrastructure providers Infura and Alchemy as well as stablecoin issuer Circle. Following the Treasury’s prohibitions, some users were also restricted by Ethereum’s most well-known DeFi programs, dYdX and Aave (both projects later lifted some of the blocks following controversy in the community).
Concerns were raised that centralized organizations would eventually be forced to censor transactions at the Ethereum network’s protocol level in the future due to the ban’s unusual nature and the quick response from centralized service providers. Some expressed concern that Coinbase would give in to regulatory pressure to prevent specific transactions from being included in fresh Ethereum blocks.
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