Coinbase says it will shut down its services if regulators want it to censor transactions

Brian Armstrong, the firm's staking services, said on August 17 that the firm would shut down its services if regulators wanted it to censor transactions as a validator.

In a hypothetical situation like that, the firm would have to focus on the bigger picture of preserving network integrity by shutting off its services, according to Armstrong.

He said that the firm could also mount a legal challenge to the request from the authorities.

Armstrong was responding to a question from rotkiapp founder Lefteris Karapetsas.

According to Dune Analytics, Coinbase is one of the largest staking solution providers, controlling over 14% of the staked ETH on the Beacon Chain.

The US-based firm revealed that the company's investment accounted for 8.5% of its revenue during the second quarter, adding that it was a high-growth area for its operation.

The firm offers staking solutions for Ethereum, Algorand ALGO Cosmos ATOM Cardano ADA Solana SOL and Tezos XTZ. It also recently began offering staking for institutional clients in early August.

Reports have emerged that the SEC was investigating Coinbase's staking product.

The community is worried that regulators could force centralized entities under their jurisdiction to censor transactions on the Ethereum protocol because of the US sanction on Tornado Cash.

66% of Beacon Chain depositors are able to accede to censorship requests from authorities, according to reports.

Vitalik Buterin, cofounder ofEthereum, said he wanted validators who would comply with censorship requests to have their staked token burned.

Another report highlighted how sanctions against Tornado Cash could affect Bitcoin Lightning Network and web 3 projects.