The global cryptocurrency market sheds blood as the American Securities and Exchange Commission (SEC) decided to shut down Kraken exchange’s “crypto asset staking-as-a-service program” and forced the global exchange to pay a fine of $30 million in restitution, prejudgment interest, and civil penalties.
The SEC asserts that Kraken promotes the ease of use of its staking investment program and the advantages that result from its efforts on behalf of investors, including its methods for securing consistent investment returns and payments.
However, Kraken stated that it will automatically unstake all assets staked by U.S. clients with the exception of staked ether, which won’t be unstaked until the Shanghai update to the Ethereum Network is implemented. Additionally, clients in the United States won’t be able to stake new assets (including ether).
“Kraken will continue to offer staking services for non-U.S. clients through a separate Kraken subsidiary,” the exchange said.
Despite the fact that Kraken reached a settlement with the agency, the move is likely to cause more problems for cryptocurrency businesses operating in the United States as the SEC looks to further restrict passive investment products in the wake of several high-profile failures that left investors in court seeking pennies on the dollar.
Brian Armstrong, the founder, and CEO of Coinbase voiced his concerns about the SEC’s plan to ban cryptocurrency staking for retail users in the United States, adding that such a move would be terrible for the country if allowed.
Meanwhile, SEC Commissioner Hester Pierce has openly slammed her own agency for shutting down Kraken’s crypto staking program. She lambasted the regulator, claiming that controlling an emerging industry through enforcement “is not an efficient or fair way of regulating” it.
Crypto Market Suffers after SEC Shuts Down Kraken Staking Services
The market has suffered as a result of the SEC’s decision. As of press time, Bitcoin (BTC) is now trading at roughly $21,700 on Coinmarketcap, down 4.1% from its previous 24-hour high of $22,000. Similar to BTC, the price of Ethereum (ETH) has sharply decreased by 5.82% and is now at $1,539. The two most popular cryptocurrency tokens on the market have decreased by more than 7.59% and 6.74%, respectively, over the past seven days.
The decline also spread to the rest of the market. Ripple (XRP) has dropped by 2.63%, Binance Coin (BNB) has dropped by 4.41%, and Polygon (MATIC) has fallen by 4.14%. Cardano (ADA) and Solana (SOL) have both plummeted by 6.79% and 9.26%, respectively.
Dogecoin (DOGE) and Shiba Inu (SHIB) meme cryptocurrencies are also suffering from the situation, as they have both declined by respective percentages of 7.48% and 8.09% in the last 24 hours.
The SEC’s shutdown of Kraken’s crypto staking services highlights the agency’s negative attitude towards the cryptocurrency industry. This move can be perceived as heavy-handed and overly intrusive, potentially stifling innovation and progress in the field.
Moreover, the regulatory uncertainty created by actions like this can also have a chilling effect on investment in the industry, causing harm to both companies and consumers alike. The lack of clear guidelines and standards for the cryptocurrency industry can make it difficult for companies to operate and grow, ultimately slowing down the development of the whole industry.
