In the U.S., crypto exchange Kraken has been forced by the SEC regulator to shut down its staking services. At Cardano (ADA), founder Hoskinson nevertheless sees no problems for staking.
Staking, as a low-risk method of earning passive income from crypto assets, enjoys popularity among investors. But in the U.S., the Securities and Exchange Commission (SEC) has now begun to classify staking as a service that requires approval. The first result: crypto exchange Kraken is shutting down its staking program for U.S. customers under pressure from the SEC and is also paying a $30 million fine, according to an SEC press release. Questions are now circulating about how other crypto exchanges are positioning themselves and whether staking for certain cryptocurrencies might not be legal after all. In the Cardano (ADA) case, founder Charles Hoskinson has already spoken out via video message, giving the all-clear.
“I don’t think there’s a problem with Cardano as it exists,” Hoskinson said referring to staking and the SEC, “I don’t think there’s a problem with our existing staking model.” Hoskinson thinks the difficulties for crypto exchange Kraken in terms of staking are due to the way it is marketed. At the core of such discussions in the U.S. is always whether offerings from the crypto industry have characteristics of “securities” and therefore fall under SEC regulation. Hoskinson had already explained in the summer of 2022 that Cardano’s decentralized structure meant that it could not be compared with securities.
Meanwhile, the US crypto exchange Coinbase declared in an official blog post to continue its staking programs and to defend this in court if necessary. Staking as a service cannot be compared to securities, it said. Moreover, the SEC’s line would only lead to US citizens turning to foreign, unregulated providers for staking.
It remains to be seen whether the SEC will be satisfied with its action against Kraken or will take on other crypto exchanges. In the case of Cardano, this is also piquant for investors because the staking rate is very high. Blockchain data currently shows nearly 74 percent of all ADA in circulation deposited for staking. Thus, Hoskinson also does not want to completely rule out the possibility that Cardano Staking would become the focus of authorities in the future and that details would be left out.
Conclusion: Staking as a service in the USA under general suspicion?
For you as an investor residing in the EU, the actions of the SEC have no direct consequences, staking as a service continues to be accepted in this country and Kraken also continues its staking programs for non-US customers. But it is foreseeable that in the future staking will be looked at more critically by regulators and differences in mechanisms will also matter. Then we will have to see whether Cardano boss Hoskinson is right in his thesis that ADA is decentralized through and through and therefore does not have to fear any legal constraints.