Kraken Shuts Crypto Staking in SEC Settlement

TORONTO (CoinChapter.com): Kraken concurred to shuts its crypto-staking services to resolve its accusations with the United States Securities and Exchange Commission, as per a knowledgeable individual familiar with the circumstances.

The SEC voted on the settlement resolution in a private meeting of the commissioners on Thursday afternoon.

A representative from Kraken declined to give any official response. Requests for comment from the SEC were not immediately answered.

Under the Kraken staking system, various services, such as a crypto-lending product with up to 24% return, are available. However, as part of the settlement, this option is likely to be shut down, an anonymous source reported.

Kraken’s staking platform pledges a 20% Annual Percentage Yield (APY) and delivers staking rewards in bi-weekly intervals, as detailed on their website.

As reported by Bloomberg on Wednesday, Kraken is close to reaching a settlement with the Securities and Exchange Commission over the charges that it permitted unregistered securities.

On Wednesday, a decision was made one day after Coinbase CEO Brian Armstrong tweeted about hearsay that the SEC would prevent retail customers from participating in staking. Staking involves dedicating crypto tokens to facilitate blockchains such as Ethereum. The SEC declined to comment on Armstrong’s declaration. Coinbase provides its staking services.

Gary Gensler, Chair of the SEC, has previously indicated that he surmises staking through third-party services such as Kraken might satisfy the Howey Test, an established Supreme Court ruling used to determine if something is a security or not regarding US regulations.

Gensler commented that staking appears much the same as lending, and the SEC has already taken action and settled charges against lending firms, for example, the defunct BlockFi.

Gensler’s mission stands to receive a major boost with a Kraken arrangement as the agency strives to regulate the crypto sphere.