The SEC has alleged that Kraken's staking program was touted as an easy-to-use platform that offered benefits from Kraken's efforts, including strategies to obtain regular investment returns.
Kraken To Unstake Assets
Kraken will automatically unstake any assets staked by US clients, excluding staked ether, which will be unstacked after the Ethereum Network's Shanghai upgrade. US clients will also be unable to stake new assets, including ether. Non-US clients are not affected by these changes.
Staking Risks Highlighted
Staking is a process used by proof-of-stake blockchain networks like Ethereum to maintain their security. The SEC's lawsuit has highlighted the risks involved in staking tokens with staking-as-a-service providers, which offer very little protection to investors. Crypto intermediaries offering investment contracts for tokens need to provide the proper disclosures and safeguards required by the securities laws, according to SEC Chair Gary Gensler.
SEC's Statement on Staking Services
The SEC's action is meant to make it clear to the marketplace that staking-as-a-service providers must register and provide full, fair, and truthful disclosure and investor protection. Other companies like Coinbase also offer staking services for their customers and several decentralized protocols.