SEC bans exchanges from offering staking services to US customers

[PM Bug]

...
The SEC wrote in their complaint that since 2019, Kraken offered and sold its crypto asset ‘staking services’ to the general public, and that investors effectively lost control of their tokens and took on the risks associated with staking-as-a-service platforms.

“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 Gensler. “Today’s action should make clear to the marketplace that staking-as-a-service providers must register and provide full, fair, and truthful disclosure and investor protection.”
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https://www.kitco.com/news/2023-02-0...a-service.html

Looks like Americans won't be able to stake coins on exchanges any more. I expect Coinbase will be ending their staking services (for Americans) too.

[ynot2k]

https://www.kitco.com/news/2023-02-0...a-service.html

Looks like Americans won't be able to stake coins on exchanges any more. I expect Coinbase will be ending their staking services (for Americans) too.

First I had to look up what is staking. The info was a bit nerve wrecking,

Then I had to look up can bitcoin be staked? The info was calming.

All is good, carry on.

[insidedealer]

First I had to look up what is staking. The info was a bit nerve wrecking,

Then I had to look up can bitcoin be staked? The info was calming.

All is good, carry on.

I don't know what it is you read, but I wouldn't be so fast to stay calm and carry on.
We had a thread a few years ago that spoke a bit to this staking business. It's mainly something with the "other" coins, not bitcoin.
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I don't think that Bitcoin can be staked, but I'd advise all to be wary of any business, whatever it's called, that involves receiving money in exchange for some claim on your bitcoin. Just as I'd be wary of any business that involved receiving money in exchange for some claim on your gold.

[ynot2k]

I don't know what it is you read, but I wouldn't be so fast to stay calm and carry on.
We had a thread a few years ago that spoke a bit to this staking business. It's mainly something with the "other" coins, not bitcoin.
.
I don't think that Bitcoin can be staked, but I'd advise all to be wary of any business, whatever it's called, that involves receiving money in exchange for some claim on your bitcoin. Just as I'd be wary of any business that involved receiving money in exchange for some claim on your gold.

I think we see the situation the same. The only reason I became calm is that the staking crap can not be done with Bitcoin. I suppose it could be said that such an attitude is unkind to holders of non-bitcoin crypto, and perhaps I should have more carefully worded my response so as to not give a sense that all is good with staking.

For clarity, insidedealer is correct - all would be well advised to be cautious of staking and any business that allows it.

As it turns out, Coinbase is involved in it as well https://www.google.com/search?client...+allow+staking

I think that is a bad turn of events as it gives regulators a way to come at Coinbase if (when?) they want to do so.

[PM Bug]

Most crypto coins are built on the Proof of Stake (PoS) model for better efficiency (faster transactions, less energy cost). These coins allow holders to stake coins. Staking is kind of like betting on a someone that is helping to maintain the operation of the network is working properly. It's providing insurance in a way to the network security. Stakeholders get paid staking rewards for their effort (risk).

Bitcoin (and a handful of other coins) is built on a Proof of Work model. These coins do not have a staking system.

The process for staking a PoS coin is ... not straightforward. I'm fairly technology/computer savvy and when I start trying to figure out how to do it, it seems like a lot of headaches to keep track of.

Major exchanges like Coinbase and Kraken have offered their customers a staking service for various PoS coins. Coinbase just does it automatically for any eligible PoS coins that you keep on their exchange. Kraken actually has an interface that gives you more control over staking - allowing you to stake and unstake any amount of coin that you keep on their exchange at any time.

Of course, the exchanges keep a small percentage of the staking rewards for themselves for managing all the technical details. You can actually earn more rewards from staking the coins directly (if you can figure out how to do it).

~~~

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“Companies like Kraken can offer investment contracts and investment schemes but they have to have full, fair, and truthful disclosure. This puts investors in a better position,” said Gensler. “They were not complying with that.”
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... Kraken knew how to register, other firms know how to register. It’s just a form on our website,” said Gensler. “If they want to offer staking, we’re neutral. Come in, register. Because investors need that disclosure. What are you doing with the tokens? Are you trading against the tokens? Are you borrowing against the tokens? Are you using them for your own purposes?
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https://www.marketwatch.com/story/we...aking-79c71790

Sounds like it might not be quite the death knell for exchange staking service that it was being made out to be. Exchanges just need to get their ducks in a row.

[PM Bug]

Dissention within the SEC:

https://www.sec.gov/news/statement/p...-kraken-020923

h/t: https://www.kitco.com/news/2023-02-1...om-within.html

I think we are still aways away from the dust being settled.