Kraken, a crypto exchange, has reportedly paid $30m to regulators to settle a case regarding its staking program. The Securities and Exchange Commission charged Kraken with failing to register the offer and sale of its staking program, which offered investors advertised annual investment returns of up to 21%. The SEC aims to protect average citizens from high yield claims and prevent similar issues to those associated with FTX and Gemini. While the Kraken case is expected to have industry-wide implications, the move is not expected to impact decentralised staking.
Kraken Ends Staking Program and Settles $30 Million with SEC
The entire cryptocurrency market is seeing a deep decline, as the news of Kraken’s settlement with the SEC breaks. Kraken, a popular centralized exchange, will pay $30 million to settle its case, and this may have major implications for the rest of the industry. While this news may be scary, it is important to understand what is happening and why.
What is happening and why?
The SEC has charged Kraken with failing to register the offer and sale of their “staking as a service” program, where investors transfer cryptocurrency assets to Kraken in exchange for advertised annual returns of up to 21%. Essentially, the SEC is going after companies claiming to offer high yields without properly registering their service. These companies have reportedly misled people, resulting in losses for their clients.
Kraken’s settlement with the SEC could have implications for the rest of the industry, causing a domino effect. Many centralized platforms offer staking, and this settlement may result in them ending their staking programs. If you are a U.S citizen and are staking on any centralized platform, it is advised to start looking to remove your assets as soon as possible.
Why is this happening?
The government sees cryptocurrency as a threat, as it challenges their ability to control and use fiat currency. People have found ways to earn yield on their fiat currency by turning it into stable coins and staking it on centralized platforms. The SEC is attempting to protect the average person from being misled into giving away their assets for promised high yields.
Coinbase CEO Brian Armstrong has expressed concern that the SEC may ban crypto staking altogether. However, this is unlikely as decentralized staking cannot be banned in the same way as centralized staking. People have full control over their assets and can earn yield through proof of stake networks such as Ethereum, Cardano, and Nera Protocol.
In conclusion, Kraken’s settlement with the SEC is significant news, but it is important not to panic. While centralized staking may be ending, decentralized staking is unaffected. Always do your research before staking your assets and make sure you understand the risks involved.