The SEC charged Kraken, a California-based crypto exchange, with offering an unregistered cryptocurrency stake program. They cited it as a violation U.S. securities laws. This panic spread throughout the wider cryptocurrency market. Market participants and crypto enthusiasts are not yet aware if the country’s financial watchdog would completely eliminate staking.
Crypto Market Tumbles
Despite the fact that Coinbase CEO Brian Armstrong had tweeted a similar rumor earlier today, the SEC’s immediate action sent shockwaves through the crypto market. The price of Bitcoin (BTC), which dropped by around 4% over the hour, fell back to $21k. A total of $30 billion in funds left the cryptocurrency market after hearing that the exchange would disable its staking function.

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Read more: Check out the Top 10 DeFi Loan Platforms of 2023
The token fell to $21,900 at 3:30 p.m. in New York after trading above $23,000 earlier in the week. Ethereum, the Altcoin Kingpin, fell more than 5 percent, while other coins also lost ground. Avalanche and Dogecoin (DOGE), both saw declines above 8%.

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Gary Gensler, Chair of the SEC, stated in a statement that:
Today’s action should be clear to the market that staking as-a-service providers need to register and provide full disclosure and protection for investors.
Growing Fear for DeFi
The proof-of-stake (PoS), a method that allows transactions to be ordered using a collection of cryptocurrencies, is used on several blockchains, including Ethereum. According to Kraken and Staked, the value staked coins reached $42 Billion at the end last year. According to the report, 23% of all cryptocurrencies’ market capitalization is held by blockchains using staking. Kraken is 4th among the top five staked ether depositors worldwide, and Ethereum switched to proof-of-stake last September.

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However, U.S. stocks traded lower on Thursday. The S&P 500 index was on track for its third consecutive decline in four sessions this week. The S&P500 closed with a negative 0.85%, Nasdaq with -1.05%, and Dow with a loss of -0.70% for the day. Industry experts predict that cryptocurrency prices are likely to continue falling in the near future. DeFi-specific tokens will be hit the hardest because crypto staking is a vital byproduct of the larger DeFi ecosystem.
Also read: Are these tokens the future of crypto gaming in 2023?

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