Crypto exchange Kraken agreed to shut down its cryptocurrency staking service and pay $30 million in penalties to settle U.S. Securities and Exchange Commission charges that it failed to register the program, the agency said on Thursday, in a move that could cause headaches for platforms with similar offerings.
Owners of crypto assets that use a "proof-of-stake" blockchain can stake some of their assets to potentially take part in the process of validating transactions. In exchange for their work, validators are often rewarded with newly created crypto assets.
Kraken offers its customers the ability to "stake" certain crypto tokens in order to earn rewards. Its website advertises that users can earn up to 20% in annual yield if they pledge to lock up their assets for a certain period of time.In a statement, Kraken said its agreement to end its on-chain staking services would affect only U.S. clients, and that most assets enrolled in its program by U.S. users would be automatically "unstaked" starting on Thursday.
In a series of tweets on Wednesday, Coinbase CEO Brian Armstrong said a ban on staking for U.S. retail customers would be "a terrible path for the U.S." Coinbase also offers a staking service to its U.S. customers. "We need to make sure that new technologies are encouraged to grow in the US, and not stifled by lack of clear rules," Armstrong said.$362,000 to the U.S. Treasury Department's Office of Foreign Assets Control to settle civil liability related to apparent violations of sanctions on Iran, and to invest an additional $100,000 in certain sanctions compliance controls.
As part of the settlement, BlockFi had planned to offer an alternative product expected to be the first crypto interest-bearing security registered with the SEC, but the New Jersey companyReporting by Hannah Lang in Washington, Editing by Franklin Paul and Will Dunham
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