BlocksInform
Kraken has agreed to close its cryptocurrency staking operations to pay fees with US securities and foreign exchange commission (sec), according to an informed industry source on the issue.
The Sec will discuss and vote on the regulations at an in camera meeting of Commissioners on Thursday afternoon, and an advertisement could be made later today, Someone from the industry said coindesk. A second individual is expecting an announcement at approximately 4 p.m. ET (9 p.m. UTC).
A spokesman for Kraken refused to respond. Another spokesman refused to comment after the post was published.
The SEC confirmed Kraken would shut down its staking services after the publication of this article.
Kraken provides a number of services under its staking umbrella, including a crypto loan product with a return of up to 24 per cent. We also expect that this will stop under the regulations, said the person from the industry.
The staking service of Kraken offered an apy of 20%, promising to send customers marking rewards twice a week, according to his website.
Bloomberg reported that Kraken was close to a settlement with the SEC over offering unregistered securities on Wednesday.
The vote comes a day after Coinbase CEO Brian Armstrong tweeted that he’d heard rumors the SEC would bar retail customers from engaging in staking, the technique of pledging crypto tokens to run blockchains such as Ethereum. The second refused to comment on the comments of Armstrong on Wednesday evening. COINBASE provides their own sequencing services.
SEC Chair Gary Gensler has previously said he believes staking through intermediaries – like Kraken – may meet the requirements of the Howey Test, a decades-old U.S. Supreme Court case commonly used as one measure of whether something can be defined as a security under U.S. laws.
Staking sounds like a loan, said Gensler at that time. The SEC has brought and settled charges with lending companies before, such as now-bankrupt lender BlockFi.
A Kraken settlement would help Gensler’s mission, giving his agency a big win as it continues its efforts to police the broader crypto ecosystem. The majority of people staking on Ethereum, for example, use services, according to Dune Analytics.
The crypto markets fell after the release of this article, with ethereum, a piece secured by a consensus mechanism of proof of wagering, dropping by 4.5% in 30 minutes.
Contributed reporting.
UPDATE (Feb. 9, 2023, 19:55 UTC): Adds SEC's declining to comment, market reaction.
UPDATE (Feb. 9, 20:24 UTC): Adds SEC confirmation.
