• Coinbase CEO Brian Armstrong suggested that the SEC could ban staking for retail customers in the US.
• Kraken settled a lawsuit with the SEC and agreed to pay $30 million and cease offering staking services.
• The SEC’s regulatory push is an effort to bring more transparency to staking and make it more decentralized.
What Is Staking?
Staking is a process used to secure proof-of-stake networks like Ethereum, where users lock up tokens in order to earn rewards. It typically requires a large amount of capital to bring reliable returns, so many retail users pool their tokens into decentralized staking pools or stake them with exchanges.
Exchanges Fear SEC’s ‚Staking Ban‘
For crypto exchanges, staking services have become an essential source of revenue as trading volumes dropped, making up 11% of Coinbase’s revenue in Q3 2022 (up from 8.5% in Q2). However, the US Securities and Exchange Commission (SEC) has been ramping up efforts to regulate crypto exchanges and their unregulated staking services. This has caused Coinbase CEO Brian Armstrong to sound the alarms over „rumors“ about an upcoming ban on crypto staking for retail customers – a move he believes would be a „terrible path“ for the US.
SEC’s Move To Rein In Stalking Services
On Friday, SEC Chair Garry Gensler explained the agency’s move to rein in staking services. He said that crypto exchanges advertise returns on these products but don’t provide enough information about what they’re doing with investors‘ tokens – something that investors have a right to know about before investing. As such, these staking contracts should be considered securities by law requiring greater disclosure and regulation by the SEC – thus providing transparency and decentralization within this market sector.
Kraken Settles Lawsuit With The SEC
Kraken recently settled its own lawsuit with the SEC by agreeing to pay a $30 million fine and stop providing its own staking services – although this only applies strictly within its platform rather than across all US crypto platforms offering similar products. This settlement serves as an important reminder for other exchanges of what can happen if they fail to properly disclose information about their offerings or misrepresent them as non-securities investments when they are actually securities investments under law.
In conclusion, while there may not be an outright ban on crypto stakingservices for retail customers in the US anytime soon, it is clear thatthe SEC will continue their efforts towards regulating these activitiesand bringing greater transparency into this sector of cryptocurrencyinvestment opportunities.