Breaking: Kraken To Shut down This Feature As Settlement with SEC

According to recent reports, Kraken reached a settlement agreement with the U.S Securities and Exchange Commission (SEC). This requires Kraken to cease operations related to staking cryptocurrency. The topic of the settlement will be discussed at a meeting of the SEC commissioners on Thursday afternoon. This will be followed by an announcement that may occur later in the day.
Kraken Sunsets Crypto Staking
The Kraken crypto exchange offers customers a variety services under the staking umbrella. One of these is a crypto lending product that promises returns up to 24%. This will likely end as a result. According to Kraken’s website, the company promised a 20% annual percentage yield (APY), and that customers would receive staking payments two times per week.
According to reports, the SEC was quoted as saying:
The Kraken Staking Program is offered as a security measure and is sold to the public.
This decision was taken just days after Coinbase CEO Brian Armstrong said that rumors had circulated that the SEC might prohibit retail customers from using the Staking feature. This involves placing crypto tokens as collateral to support blockchains like Ethereum. The SEC did not react to Armstrong’s comments, but took immediate action to address them. This raises doubts about Coinbase’s proprietary staking service and other exchanges in the United States.
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According to CoinGape, Kraken was close to settling with the SEC on Wednesday regarding the sale of unregistered securities.
SEC’s Growing Crypto Crackdown
Gary Gensler, the SEC Chair, has stated that staking might need to pass the Howey Test requirements even if they are distributed through licensed intermediaries such as Kraken or Coinbase. The Howey Test is a widely used measure to determine whether tokens are securities or not according to the laws of the country. It dates back many decades.
Gensler stated at the time that staking seems to be similar to lending. The SEC has in the past brought charges against lending companies and settled them with the companies.
Kraken, despite being granted a license in Abu Dhabi a year ago, has stopped operations in Abu Dhabi. It had stopped doing business in Japan earlier, citing falling cryptocurrency demand as well as the country’s strict regulatory environment.
Also read: Are these tokens the future of crypto gaming in 2023?

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