Kraken ends its crypto-staking services for US customers after $30M SEC charge • TechCrunch

Image credit: Kraken

Kraken has settled the charges with the US Securities and Exchange Commission (SEC) and is ending its betting program on the chain, the public agency shared on Thursday.

The exchange, which was charged under its subsidiaries Payward Ventures and Payward Trading, will pay $30 million in fees for “disgorgement, prejudgment interest and civil penalties.” In response to the settlement, Kraken has agreed to end its on-chain staking services for US customers, a spokesperson for the exchange told TechCrunch.

As part of the settlement, Kraken has neither admitted nor denied the SEC’s allegations, the spokesperson added.

“Whether through stake-as-a-service, lending or other means, crypto intermediaries, when offering investment contracts in exchange for investors’ tokens, must provide the proper disclosures and safeguards required by our securities laws,” SEC Chairman Gary Gensler said in the release. “Today’s action should make clear to the market that staking-as-a-service providers must register and provide full, fair and truthful disclosure and investor protection.”

“Starting today, with the exception of staked ether (ETH), assets registered in the on-chain staking program by US customers will automatically be unstaked and will no longer earn staking rewards,” a Kraken spokesperson said. “Furthermore, US customers will not be able to stake additional assets, including ETH.”

Founded in 2011, Kraken offers over 90 tokens to 190 supported countries, according to its website. This update does not affect customers outside the US, and deployment services will continue uninterrupted in other regions. “These clients will receive betting services from a separate Kraken subsidiary,” the spokesperson said.

Staking is a way to earn rewards for holding a certain token for a certain amount of time. In return for effort, people are paid returns or additional rewards in exchange for holding their coins to secure the network. Kraken’s staking service offered up to 20% APY, with promises to deliver customers their rewards twice a week, according to the site.

The news comes less than a day after Coinbase CEO Brian Armstrong tweeted that he has heard rumors that the SEC wants to get rid of crypto betting for US-based clients.

“I hope that’s not the case, as I think it would be a terrible path for the United States if it were allowed to happen,” Armstrong said in the tweet. thread. “Staking is a very important innovation in crypto. It allows users to participate directly in running open crypto networks. Staking brings many positive improvements to the space, including scalability, increased security and reduced carbon footprints.”

While this settlement hampers Kraken’s betting operations, it does not fully answer the question of whether the SEC will block all crypto betting going forward. It is also worth noting that Coinbase also has its own staking services.

The SEC did not respond to requests for comment from TechCrunch at the time of publication.

This article may be updated to reflect new information.