Kraken announced, "Starting today, Kraken will automatically unstake all US client assets enrolled in the on-chain staking program. These assets will no longer earn staking rewards."
Crypto exchange Kraken has agreed to pay $30M and shut down crypto staking services for US clients after facing charges from the SEC.
Earlier today, reports emerged that the SEC had launched an investigation into Kraken. The SEC's probe was aimed at determining whether the exchange offered unregistered securities to its US clients.
Today @SECGov charged Kraken for the unregistered offer & sale of securities thru its staking-as-a-service program.
— Gary Gensler (@GaryGensler) February 9, 2023
Whether it’s through staking-as-a-service, lending, or other means, crypto intermediaries must provide the proper disclosures & safeguards required by our laws.
In its press release, the SEC revealed that Kraken has settled with the regulator. Although Kraken has refused to admit or deny the SEC’s charges, the exchange will stop offering crypto staking services.
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In the words of SEC chairman, Gary Gensler,
“Today’s action should make clear to the marketplace that staking-as-a-service providers must register and provide full, fair, and truthful disclosure and investor protection.”
According to Kraken’s blog post, the exchange will automatically unstake its US clients’ non-Ethereum (ETH) tokens and return the assets to their wallets. Meanwhile, the staked Ethereum assets will continue to generate the rewards until the Shanghai update.
Kraken also confirmed that it will use a separate subsidiary to ensure that staking services remain unaffected for its non-US customers.
My thoughts on today's Kraken settlement: https://t.co/mijt3MNN4U
— Hester Peirce (@HesterPeirce) February 9, 2023
However, SEC Commissioner Hester Peirce voiced her disagreement with the agency's actions. She noted that instead of issuing guidance, the SEC used enforcement action to clamp down on staking and added,
“Staking services are not uniform, so one-off enforcement actions and cookie-cutter analysis does not cut it.”
Written by
Ayush Pande
Ayush Pande is a hardware, gaming, and crypto writer based in India. He's a tech enthusiast who's fascinated by the potential of blockchain technology.
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