Coinbase Custody, the largest operator of Tezos staking validator, has migrated its validator from the U.S. to Ireland.
In a blog post published Tuesday, Luke Youngblood of Coinbase Custody wrote that the firm had taken the decision to help Switzerland-based Amun to meet regulatory requirements of its Tezos exchange-traded product (ETP).
"Amun needed [Tezos] staking activity to take place in the EU so it could comply with regulations, but the Coinbase Custody Tezos Bakery was currently operating in the US. This is the story of how we migrated our Tezos Bakery from the US to Ireland with only 1 minute of downtime," wrote Youngblood.
That claim, however, does not appear to be true.
Hany Rashwan, CEO of Amun, told The Block: "Our regulatory requirements do not stipulate that staking needs to take place in the European Union and we did not request this from our Coinbase partners."
"We are excited to work with both the Tezos Foundation and Coinbase on this innovative product and continue to have a very strong relationship with both," Rashwan added.
Amun Tezos ETP was launched last November, and it allows investors to earn passive income via transactions that are validated on the Tezos blockchain. The underlying Tezos tokens of the ETP are staked by and custodied with Coinbase Custody.
It remains unclear what the actual reason might be to migrate the validator to Ireland, as well as how the decision would impact Coinbase Custody's U.S. clients. The Block has reached out to Youngblood for comments and will update this story should we hear back.
Coinbase Custody launched the Tezos (XTZ) staking service in March 2019, helping its clients stake or "bake" the token on their behalf.
In proof-of-stake networks, such as Tezos, investors can put up tokens for a bond to help run and secure the network. Those investors are then rewarded with additional tokens, allowing them to gain interest on their principal investment.
Coinbase Custody's service comes at a cost. The firm takes out 25% from the current average Tezos staking yield of around 7%, which means its clients are able to earn around a little over 5% annually by staking Tezos.
Initially only available for institutional clients, the staking service was recently extended to all global investors of Coinbase Custody. Looking ahead, the firm is said to be launching the service for more proof-of-stake tokens.