‘Staking-as-a-service providers must register and provide full, fair disclosure, investor protection,’ says SEC chair
US-based cryptocurrency exchange platform Kraken will end its crypto-staking operations in the US and pay a $30 million settlement, the Securities and Exchange Commission (SEC) announced Thursday.
The SEC said it charged two Kraken entities with failing to register the offer and sale of their crypto asset staking-as-a-service program.
To settle the charges, the entities agreed to immediately cease offering or selling securities through crypto asset staking services or staking programs and pay $30 million in disgorgement,prejudgment interest and civil penalties, it added.
Staking is a process where investors lock their crypto assets for a period of time in order to support the operation of a blockchain as they earn more crypto in return.
“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,” SEC Chair Gary Gensler said in a statement.
“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.”
Kraken, the world’s third largest crypto platform in terms of daily trading volume, announced in December that it decided to stop its operations in Japan in January amid the current downturn in the global crypto market.
Many crypto firms faced financial hurdles last year, which was dubbed the “crypto winter,” including FTX, Three Arrows Capital, Voyager, Celsius, Genesis and BlockFi, and later Luno in January.