U.S. SEC targets crypto exchange Kraken over crypto-staking services.
SEC comes after crypto exchange Kraken over staking operations.
Source: Unsplash
Cryptocurrency exchange Kraken has agreed to immediately end its U.S. crypto staking operations to settle charges with the U.S. Securities and Exchange Commission (SEC).
Kraken’s staking platform offered 20% APY, rewarding stakers biweekly.
As a result of Kraken’s staking termination, the majority of staking tokens fell in price, including ADA, NEAR, MINA, and CTSI.
Commissioner Hester M. Peirce issued a statement on the matter, disagreeing with the SEC.
“Today, the SEC shut down Kraken’s staking program and counted it as a win for investors. I disagree and therefore dissent.”
Peirce continued to question whether Kraken even had a chance at registering as a securities offering with the SEC.
“An offering like the staking service at issue here raises a host of complicated questions, including whether the staking program as a whole would be registered or whether each token’s staking program would be separately registered, what the important disclosures would be, and what the accounting implications would be for Kraken.”
Brian Armstrong — CEO of cryptocurrency exchange Coinbase, was first to raise concerns over the SEC potentially getting “rid of crypto staking in the U.S. for retail customers.” Armstrong continued, “Staking is a really important innovation in crypto. It allows users to participate directly in running open crypto networks.”
The SEC declined to comment.
Now, decentralized tokens like Lido’s LDO are likely to reign over U.S. staking markets. Liquid staking protocols have soared since Thursday’s lawsuit settlement. Governance tokens for Lido, Rocket Pool, and Frax jumped by 11%.
Staking is an important aspect of cryptocurrency infrastructure. Even in more traditional-leaning financial sectors, like with neobank Revolut, staking is just now being rolled out as a service. Either the SEC will have to adapt its regulation to be relevant to current financial capabilities, or users will have to turn to decentralized staking for their much-deserved rewards.
