• Kraken is in the process of settling with the US Securities and Exchange Commission (SEC) over charges that it offered unregistered securities.
• Kraken will immediately shut down its cryptocurrency staking-as-a-service platform for US customers and pay $30 million to settle SEC charges.
• The SEC voted on the settlement during a closed-door commissioner meeting on Thursday afternoon.
Kraken Agrees to Shutter US Crypto-Staking Operations
Crypto exchange Kraken has agreed to “immediately” end its crypto staking-as-a-service platform for U.S. customers and pay $30 million to settle Securities and Exchange Commission (SEC) charges it offered unregistered securities, the U.S. agency announced Thursday.
Details of the Settlement
The SEC confirmed Kraken would shut down its staking services for U.S. customers after the publication of this article, following a vote by commissioners in a closed session on Thursday afternoon. Kraken’s staking service had promised up to 24% yield, and sent customers staking rewards twice per week according to its website.
Implications for Crypto Regulation
The settlement signals increased regulatory scrutiny of crypto exchanges offering tokenized assets, which could have implications for other platforms offering similar services in the future. It also provides further evidence that regulators are willing to take action against companies operating outside their jurisdiction if they offer services related to digital assets in some way or another, regardless of whether those activities involve traditional financial products or not.
Background Information
The news comes one day after Coinbase CEO Brian Armstrong revealed that his company was negotiating with both federal and state authorities over potential violations of securities law related to certain tokens listed on Coinbase Pro and Prime trading platforms during 2017–18 period, including Ethereum Classic (ETC), Zcash (ZEC) and XRP (XRP). The SEC has yet to comment publicly on these negotiations as well as any potential penalties Coinbase may face if found guilty of breaking securities laws at any point during this period.
Conclusion
This settlement serves as an important reminder that all companies involved in digital asset trading should remain vigilant when it comes to complying with federal regulations governing such activities, even if they operate outside U.S borders or cater primarily towards non-US customers – failure to do so can result in significant fines or other legal action from regulators domestically or abroad.