Kraken Down on Custodial Staking
Kraken Down on Staking as a Service
On Wednesday, Brian Armstrong, the CEO of Coinbase, tweeted that he heard rumors that the U.S. Securities and Exchange Commission (SEC) might ban retail investors from engaging in cryptocurrency staking. In his tweet, he expressed concern about this possibility and said that he believes it would be a terrible path for the U.S. if that were to happen.
Then on Thursday, Kraken, another crypto exchange, agreed to close its retail staking operations in a settlement with the SEC. The settlement came after the SEC Chairman, Gary Gensler, stated that staking through intermediaries, such as Kraken, could meet the requirements of the Howey Test to be considered a security under U.S. law. After the announcement, the crypto markets fell, with $ETH dropping by 5.0% in a matter of minutes.
There is much to unpack here regarding whether the SEC has a legitimate gripe. Some of our thoughts on the matter:
Not all staking is created equal. While networks like Ethereum require a user to make an economic sacrifice to help secure the network and participate in consensus, other networks such as Aptos do not even rely on Proof-of-Stake to validate transactions but still allow users to receive additional tokens in exchange for locking up their holdings. ...Unlock this article by joining our Community!
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