The Security and Exchange Commission announced Thursday that has reached a $30 million settlement with the cryptocurrency exchange Kraken over its staking-as-a-service product,Kraken, formerly headquartered in San Francisco and now fully remote, offered users the ability to take part in a practice called staking, where users put up their crypto assets as collateral in order to validate transactions on the blockchain, and in return are awarded with more crypto.
As a remedy, Kraken must permanently cease offering staking as a service and pay the fine without admitting any wrongdoing. "Kraken reached a settlement with the U.S. Securities and Exchange Commission regarding its on-chain staking program," a Kraken spokesperson said."Kraken has agreed to end its on-chain staking services for U.S. clients only. Starting today, with the exception of staked ether , assets enrolled in the on-chain staking program by U.S. clients will automatically be unstaked and will no longer earn staking rewards. Further, U.S.
“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 SEC Chair Gary Gensler in the press release. “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.