Just one day after the news of the crypto staking ban circulated, the U.S. Securities and Exchange Commission (SEC) officially began to "take action" on crypto staking services. The first to bear the brunt was the crypto trading platform Kraken, which chose to terminate its services and accept a fine to reach a settlement after accepting the SEC's investigation. However, Coinbase still insisted that its staking service would not be affected.
According to the SEC announcement, Kraken was accused of failing to register its crypto staking service program, under which investors transferred crypto assets to Kraken in exchange for an annual return on investment of up to 21%. Kraken will terminate its crypto staking service for US users and pay $30 million to settle the SEC's charges of offering unregistered securities.
In addition, Kraken stated that it will automatically unstake any assets staked by US users except $ETH, and $ETH will not be unstaked before the Shanghai upgrade.
In response to this matter, SEC Chairman Gary Gensler said, “Whether through staking services, lending, or other means, cryptocurrency intermediaries need to make appropriate disclosures and provide safeguards required by the SEC’s securities laws when offering investment contracts in exchange for investors’ tokens. The Kraken incident should make the market realize that staking service providers must register and provide full, fair and truthful disclosures and investor protection.”
However, Hester Peirce, a member of the U.S. Securities and Exchange Commission, objected. She believed that the SEC should issue guidance on crypto pledges instead of choosing to speak through enforcement actions again. The SEC's current handling of improperly registered solutions will shut down a project that provides good services to people. The SEC's behavior is a "paternalistic and lazy" regulatory approach.
In response to the SEC's allegation that Kraken's staking service is a security, Paul Grewal, chief legal officer of Coinbase, said, "Coinbase's staking program will not be affected by Kraken's termination of its U.S. staking service. Kraken is essentially providing a yield product, and Coinbase's on-chain staking service is fundamentally different from it."
But this did not stop the plunge in Coinbase's stock price. Its stock price plummeted by about 14% at the close, the biggest drop since July 26, 2022. In addition, according to TokenInsight data, $cbETH, a liquid pledge derivative launched by Coinbase, fell 4.53% in the past 24 hours.
Although Kraken chose to settle with the SEC, Coinbase CEO Brian Armstrong said that "we will continue to fight for economic freedom. To be the most trusted brand in the cryptocurrency field means protecting Coinbase customers from excessive interference from the authorities."
