“Insanely Bullish” for Ethereum: Coinbase Supports Staking & Trading of ETH 2.0
As ETH 2.0 gets ready for the launch of its Phase 0, the beacon chain, today cryptocurrency exchange Coinbase has announced support for the multi-year upgrade.
The San Francisco-based company will be providing support for ETH 2 staking and trading.
“Excited that we'll be supporting ETH2,” said Coinbase CEO Brian Armstrong, adding, just like the Internet had to go through scalability, privacy, and usability, these factors are going to be “key to building the cryptoeconomy.”
Coinbase customers will soon be able to convert ETH in their accounts to ETH2 and earn staking rewards. While staked ETH2 tokens will remain locked on the beacon chain, Coinbase will enable trading between ETH and ETH2. The exchange said,
“We’ll be launching the above features to customers in eligible jurisdictions starting in early 2021.”
A major milestone for ETH2, this upgrade aims to solve the network's limited scalability and high gas prices.
However, the crypto community is now wondering about the taxation liability of this. Campbell Pentney, a special counsel with docs on taxation and interest in blockchain and cryptocurrencies noting,
“Coinbase will allow trading between ETH 1.0 and ETH 2.0. That makes me feel like it is a different “coin” from a tax perspective. Now the BIG question is will they have different prices? If only one is stakeable, I assume so.”
If it is indeed taxable, Ethereum co-founder Vitalik Buterin advises to “solo stake instead of trading your eth for a centralized pool's issued tokens.”
As of right now, the only way to start staking is via the deposit contract.
We still believe depositing into the deposit contract is NOT a taxable event.
How staking providers implement it might make it a taxable event unfortunately. https://t.co/1Dr2HiSP2C
— TokenTax (@TokenTax) November 30, 2020
Coinbase allows users to mint BETH by staking ETH on the exchange and then trading it against the digital assets and other coins, providing staking rewards and liquidity at the same. This makes it “very attractive” for other exchanges to do the same, said independent researcher Hasu.
Meanwhile, trader and entrepreneur Qiao Wang sees this as “insanely bullish” for Ethereum as this will be reducing the supply of ETH in circulation.