With the recent news surrounding Kraken and the SEC, many digital currency participants believe a staking ban could be around the corner.
Could Kraken Just Be the Start?
Earlier today, Live Bitcoin News put out an article talking about how popular digital currency exchange Kraken had settled with the SEC and agreed to shut down its staking program as part of the settlement. The company will also part with more than $30 million in penalty fees. A spokesperson for Kraken offered the following statement:
Starting today, [except for] staked ether, assets enrolled in the on-chain staking program by U.S. clients will automatically be unstaked and will no longer earn staking rewards. Further, U.S. clients will not be able to stake additional assets, including ETH.
It’s unclear if this will cause other staking programs in the United States to be struck down. Francesco Melpignano – chief executive at Kadena Eco – believes that the news is going to cause several traders currently enjoying staking benefits to shift their assets over to decentralized exchanges so their money cannot be controlled or taken away from them.
In any case, Melpignano told investors that they should probably consider more bitcoin opportunities as a means of avoiding future problems. Melpignano commented:
Bitcoin has always been on the safe side of regulation.
Despite offering an initial warning earlier in the month that staking would potentially be banned in America, Brian Armstrong – the CEO of Coinbase – said his company’s staking program is fundamentally different from the one delivered by Kraken and that customers weren’t in any present danger. A statement was offered by the firm’s chief legal officer Paul Grewal. It reads as follows:
Coinbase’s staking program is not affected by today’s news. What’s clear from today’s announcement is that Kraken was essentially offering a yield product. Coinbase’s staking services are fundamentally different and are not securities.
Some are adamant that the SEC is not going to stop until all staking opportunities in the U.S. are gone. One of those individuals – Chris Burniske, a partner at Placeholder VC – commented:
What [SEC chief] Gary [Gensler] doesn’t get is crypto staking will march on globally, decentralized and offshore, and his meddling hands will now have even less of a say in the matter.
Kristin Smith – chief executive at the lobbyist group Blockchain Association – also threw her two cents into the mix, saying:
Today’s settlement isn’t law, but [it’s] another example of why we need Congress, not regulators, to determine appropriate legislation for this new technology. Otherwise, the U.S. risks driving innovation offshore and taking online freedoms away from individual users.
How the Process Works
Staking is a process in which crypto holders have their assets locked up for a specific period.
All the while, they’re earning interest on them and growing their portfolios.