Crypto exchange Kraken has agreed to pay $30 million and discontinue offering staking-as-a-service in the US, in order to settle charges of offering an unregistered security with the Securities and Exchange Commission (SEC).
The complaint against Kraken details how the SEC feels that the pooling of staking user assets and efforts to derive profits for them results in the staking product being a security.
Kraken provided a statement to Protos that noted it was only required to end the program for US clients. “Starting today, with the exception of staked ether (ETH), assets enrolled in the on-chain staking program by US clients will automatically be unstaked and will no longer earn staking rewards,” a spokesperson told Protos.
As part of its settlement, Kraken neither admits nor denies the allegations of the SEC.
On Wednesday, Coinbase chief Brian Armstrong tweeted about the “rumors” he had been hearing about the SEC’s intention to pursue entities who had offered staking-as-a-service. “I hope that’s not the case as I believe it would be a terrible path for the US if that was allowed to happen,” he commented.
However, SEC chairman Gary Gensler has previously suggested that staking products could be a security.
This effort seems to be part of the SEC broadening its enforcement actions in the cryptocurrency ecosystem.