Cryptocurrency exchange, Kraken has reached a $30 million settlement with the US Securities and Exchange Commission (SEC) and agreed to end its crypto staking-as-a-service platform for US customers.
Announced on Thursday, the settlement with Payward Ventures, Inc. and Payward Trading Ltd., two companies operating Kraken, came as the US regulator accused the exchange of failing to register its staking
Staking
Staking is defined as the process of holding funds in a cryptocurrency wallet to support the operations of a blockchain network. In particular, staking represents a bid to secure a volume of crypto to receive rewards. In most case however, this process relies on users participating in blockchain-related activities via a personal crypto wallet.The concept of staking is also closely tied to the Proof-of-Stake (PoS). PoS is a type of consensus algorithm in which a blockchain network aims to achieve
Staking is defined as the process of holding funds in a cryptocurrency wallet to support the operations of a blockchain network. In particular, staking represents a bid to secure a volume of crypto to receive rewards. In most case however, this process relies on users participating in blockchain-related activities via a personal crypto wallet.The concept of staking is also closely tied to the Proof-of-Stake (PoS). PoS is a type of consensus algorithm in which a blockchain network aims to achieve
Read this Term-as-a-service program.
Settlements are not law. They’re a decision that the economics of settling are better than fighting, no more.
The SEC thinks staking-as-a-service is a security. Kraken didn’t admit or deny either way.
It may be a tough question, but the SEC hasn’t answered it either way today.
— Jake Chervinsky (@jchervinsky) February 9, 2023
Staking offers crypto holders rewards for locking up their cryptocurrencies with a blockchain
Blockchain
Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned.) In this sense, blockchain is immune to the manipulation of data making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tampe
Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned.) In this sense, blockchain is immune to the manipulation of data making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tampe
Read this Term validator. Holders of the staked tokens receive rewards in newly mined cryptocurrencies but lose control over their original holding until they are staked.
According to SEC, Kraken launched staking-as-a-service in 2019 and advertised annual investment returns of as much as 21 percent. However, the Kraken website shows the returns to be only up to 20 percent.
Kraken’s ad on staking
The SEC raised risk-related concerns on the platforms offering staking-as-a-service as they have “very little protection.”
“Whether it’s through staking-as-a-service, lending, or other means, crypto intermediaries, when offering investment contracts in exchange for investors’ tokens, need to provide the proper disclosures and safeguards required by our securities laws,” said SEC Chair Gary Gensler.
“Today’s action should make clear to the marketplace that staking-as-a-service providers must register and provide full, fair, and truthful disclosure and investor protection.”
Kraken Is Terminating Staking for US Clients
In a blog post, Kraken confirmed that it is immediately ending its on-chain staking services for US clients and will automatically unstake all US client assets enrolled in the on-chain staking program. However, it will unstake staked Ether after the upcoming Shanghai upgrade but will now distribute rewards.
The crypto exchange further detailed that it will continue to offer staking services to non-US clients through a separate subsidiary.
The settlement between the SEC ad Kraken was finalized only a day after media reports revealed an ongoing regulatory investigation against the exchange for offering unregistered securities.
Meanwhile, Kraken is also facing the impacts of the ongoing “crypto winter.” The exchange recently reduced its workforce by 30 percent and shuttered its operations in Japan.
Cryptocurrency exchange, Kraken has reached a $30 million settlement with the US Securities and Exchange Commission (SEC) and agreed to end its crypto staking-as-a-service platform for US customers.
Announced on Thursday, the settlement with Payward Ventures, Inc. and Payward Trading Ltd., two companies operating Kraken, came as the US regulator accused the exchange of failing to register its staking
Staking
Staking is defined as the process of holding funds in a cryptocurrency wallet to support the operations of a blockchain network. In particular, staking represents a bid to secure a volume of crypto to receive rewards. In most case however, this process relies on users participating in blockchain-related activities via a personal crypto wallet.The concept of staking is also closely tied to the Proof-of-Stake (PoS). PoS is a type of consensus algorithm in which a blockchain network aims to achieve
Staking is defined as the process of holding funds in a cryptocurrency wallet to support the operations of a blockchain network. In particular, staking represents a bid to secure a volume of crypto to receive rewards. In most case however, this process relies on users participating in blockchain-related activities via a personal crypto wallet.The concept of staking is also closely tied to the Proof-of-Stake (PoS). PoS is a type of consensus algorithm in which a blockchain network aims to achieve
Read this Term-as-a-service program.
Settlements are not law. They’re a decision that the economics of settling are better than fighting, no more.
The SEC thinks staking-as-a-service is a security. Kraken didn’t admit or deny either way.
It may be a tough question, but the SEC hasn’t answered it either way today.
— Jake Chervinsky (@jchervinsky) February 9, 2023
Staking offers crypto holders rewards for locking up their cryptocurrencies with a blockchain
Blockchain
Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned.) In this sense, blockchain is immune to the manipulation of data making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tampe
Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned.) In this sense, blockchain is immune to the manipulation of data making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tampe
Read this Term validator. Holders of the staked tokens receive rewards in newly mined cryptocurrencies but lose control over their original holding until they are staked.
According to SEC, Kraken launched staking-as-a-service in 2019 and advertised annual investment returns of as much as 21 percent. However, the Kraken website shows the returns to be only up to 20 percent.
Kraken’s ad on staking
The SEC raised risk-related concerns on the platforms offering staking-as-a-service as they have “very little protection.”
“Whether it’s through staking-as-a-service, lending, or other means, crypto intermediaries, when offering investment contracts in exchange for investors’ tokens, need to provide the proper disclosures and safeguards required by our securities laws,” said SEC Chair Gary Gensler.
“Today’s action should make clear to the marketplace that staking-as-a-service providers must register and provide full, fair, and truthful disclosure and investor protection.”
Kraken Is Terminating Staking for US Clients
In a blog post, Kraken confirmed that it is immediately ending its on-chain staking services for US clients and will automatically unstake all US client assets enrolled in the on-chain staking program. However, it will unstake staked Ether after the upcoming Shanghai upgrade but will now distribute rewards.
The crypto exchange further detailed that it will continue to offer staking services to non-US clients through a separate subsidiary.
The settlement between the SEC ad Kraken was finalized only a day after media reports revealed an ongoing regulatory investigation against the exchange for offering unregistered securities.
Meanwhile, Kraken is also facing the impacts of the ongoing “crypto winter.” The exchange recently reduced its workforce by 30 percent and shuttered its operations in Japan.
Source link
