According to a press release from the regulator, cryptocurrency exchange Kraken plans to discontinue staking services for US residents as part of a settlement with the SEC. February 9.
The U.S. Securities and Exchange Commission has indicted Kraken for failing to register its cryptocurrency staking service as a security service.
Kraken has been offering staking services to the public since 2019, according to regulators. Users will be able to deposit their cryptocurrency holdings under the program, and Kraken advertised rewards of up to 21% for those who participate in the offer.
The SEC argued that using Kraken’s staking service would allow participants to lose control of their assets and risk them “with little protection.” Kraken has also complained that it determines user rewards separately from the underlying blockchain staking mechanism and, as a result, does not adequately disclose to users how rewards are determined.
Kraken has now agreed to settle with the SEC by ceasing to provide staking services and paying $30 million in various fines and penalties. agreed to enter a final judgment permanently barring or restricting it from offering securities through its trading services.
Kraken confirmed Terminate staking services to users in the United States and automatically unstake those assets. It said it will continue to offer staking to users outside the United States and that the service will continue uninterrupted.
The news comes on the heels of reports that Kraken has failed to respond to subpoenas from the IRS seeking information about its customers’ identities and transactions.US filed petition to enforce its subpoenas February 3rdThat action continues from efforts to serve subpoenas dating back to 2021 and appears unrelated to the SEC’s actions today.
Yesterday, Coinbase CEO Brian Armstrong said he had heard rumors that the SEC was looking to ban retail staking services.
Edit: This article has been updated to include information from Kraken’s official announcement.