Kraken, a U.S.-based crypto exchange, has settled with the U.S. Securities and Exchange Commission (SEC) to sunset its crypto staking service. This news caused the governance tokens of the largest liquid staking protocols to surge. Lido Finance, the largest liquid staking protocol with $8.4 billion of staked ether (ETH), saw its LDO governance token jump 10.4% in an hour. Rocket Pool’s RPL token and Persistence’s pSTAKE token rose 7.3% and 6.7%, respectively. StaFi’s FIS token gained 11.4%. Although the tokens have since pared some of their earlier gains, the news of Kraken’s settlement with the SEC has had a positive effect on the prices of liquid staking protocol tokens.
The crypto market experienced a downturn on Thursday, with the CoinDesk Market Index (CMI) dropping 2.2% in an hour. Bitcoin (BTC) and Ether (ETH) both saw declines in the past 24 hours. However, the crypto market was buoyed by a rally in Dogecoin (DOGE), which saw a surge of over 50% in the past 24 hours. The rally was driven by a tweet from Tesla CEO Elon Musk, who called Dogecoin “the people’s crypto”. The surge in Dogecoin’s price served as a counterweight to the broader crypto market’s downturn.
Staking is a consensus mechanism used to validate transactions on proof-of-stake blockchains, such as Ethereum, and provides investors with the opportunity to earn yield on their digital asset holdings. However, the U.S. Securities and Exchange Commission (SEC) has expressed concerns that staking services may be considered unregistered securities under current regulations. As such, investors should be aware of the potential risks associated with staking services and should consult with a financial professional before investing in them.
The SEC recently settled with Kraken, one of the largest centralized exchanges, over charges of unregistered securities transactions. This settlement may be a boon for decentralized exchanges, as it could lead to users shifting away from centralized service providers. Currently, centralized exchanges such as Binance, Coinbase and Kraken are popular staking providers, accounting for 28% of all staked ether. Decentralized exchanges may be able to capitalize on this shift, as users look for more secure and transparent alternatives to centralized exchanges.
