• Kraken has agreed to shut down its cryptocurrency-staking operations in the U.S. as part of a settlement with the SEC
• The SEC voted on the settlement during a closed-door commissioner meeting and an announcement is expected soon
• Kraken’s staking service offered a 20% APY, promising to send customers staking rewards twice per week
Kraken Agrees to Shut Down US Crypto-Staking Operations
Kraken, one of the world’s leading crypto exchanges, has agreed to shutter its crypto staking-as-a-service platform for U.S. customers and pay $30 million to settle Securities and Exchange Commission (SEC) charges it offered unregistered securities. This decision was reached after a closed-door commissioner meeting held by the SEC on Thursday afternoon.
Details of the Settlement
In addition to ceasing their staking service for U.S. customers, Kraken will also end its crypto lending product offering up to 24% yield as part of this settlement agreement with the SEC. Under its staking service, Kraken had promised customers a 20% APY and sent out rewards twice per week according to their website.
Implications for Crypto Regulation
The resolution between Kraken and the SEC could have far reaching implications for crypto regulation in the United States as more exchanges may now be subject to similar oversight from financial regulators going forward. In addition, this case could provide further guidance on which activities constitute offering unregistered securities that are prohibited under existing laws and regulations in order to protect investors from potential fraud or other risks associated with such offerings.
Reaction from Industry Leaders
CoinDesk Global Policy and Regulation Managing Editor Nikhilesh De discussed the details of this case as well as wider implications for crypto regulation following this decision by Kraken: “The vote comes a day after Coinbase CEO Brian Armstrong called on regulators like the SEC to clarify what constitutes an offering of digital assets that is subject to security laws.“
Overall, while there may be some short term pains associated with these regulatory decisions, they should ultimately serve as a positive development towards greater stability in cryptocurrency markets over time by providing clarity around which activities are permissible under existing laws and regulations in order for investors to be better protected from potential risks involved when making investments into digital assets.