The US Securities and Exchange Commission (SEC) announced a settlement where Kraken has agreed to end its offering or selling securities through crypto staking services or staking programs and pay a $30 million settlement.
All US clients will be automatically unstaked from this program and these assets will no longer earn rewards. This applies to all staked assets except for staked ether (ETH). After the Shanghai update, all staked ETH will become unstaked, but rewards will still be earned while they are held.
The crypto asset staking-as-a-service product, according to the SEC, was offered and sold by Kraken without being registered. Though a separate Kraken subsidiary will be formed to manage staking of non-US clients.
“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.
Final payouts will be prorated by Kraken through February 9. Kraken will instead pay out benefits in their non-staked form, preventing these payments from becoming staked.
However, SEC Commissioner Hester Pierce criticized SEC for its actions. She said, “Today, the SEC shut down Kraken’s staking program and counted it as a win for investors. I disagree and therefore dissent.”
She suggested that SEC should have started a “public process to develop a workable registration process that provides valuable information to investors.”