In accordance with a settlement with the SEC, crypto exchange Kraken has acknowledged the termination of its cryptocurrency staking services. The announcement follows Coinbase’s Brian Armstrong’s confirmation of rumours that the SEC was investigating crypto-staking service providers.
The SEC Harpooned The Kraken.
After announcing to termination of its crypto staking services, the Kraken cryptocurrency exchange has become the latest victim of the SEC’s strict crypto regulations. In a meeting held behind closed doors on Thursday, the exchange decided to discontinue offering certain services in the US.
Though it has not yet been released, the formal statement is anticipated to do so at around 4 PM ET (21:00 UTC). The exchange has been providing staking services with an APY of 20%, promising to pay investors a return every two weeks.
According to Bloomberg on Wednesday, the exchange had been on the SEC’s radar and was close to reaching a settlement. However, the discontinuation of the exchange’s crypto-staking program was not a card that was seen coming; nonetheless, it is not a wild card because everyone anticipated that it might occur.
Are Crypto-Staking Companies The Target Of The SEC?
The revelation that Kraken was “forced” to give up its cryptocurrency staking services shocked but not surprised the cryptocurrency community. Brian Armstrong, the CEO of Coinbase, revealed earlier today that the U.S. SEC was targeting companies that provide crypto-staking services.
Today we charged Kraken with failing to register the offer and sale of their crypto asset staking-as-a-service program, whereby investors transfer crypto assets to Kraken for staking in exchange for advertised annual investment returns of as much as 21 percent.
— U.S. Securities and Exchange Commission (@SECGov) February 9, 2023
Armstrong detailed in his crypto thread how there had been speculations that the sector would soon be prohibited from providing staking services to U.S. retail investors. Although he condemned the SEC’s action, no one would have informed him that crackdowns would soon start.
However, not everyone agreed with Armstrong’s views; co-founder of Cardano Charles Hoskinson argued that crypto-staking platforms would perform better. Some crypto staking systems, he claimed, require more improvement.