Kraken Cuts Ties with US Staking Services, Settles SEC Lawsuit for $30 Million

Kraken, a popular crypto exchange, will pay the Securities and Exchange Commission (SEC) a $30 million fine and discontinue its crypto staking-as-a-service platform for US clients. The SEC’s lawsuit against Kraken accuses the company of offering unregistered securities. Kraken’s staking service offered US clients the chance to earn up to 21% through staking their tokens, but the SEC warns that staking-as-a-service providers can come with risks. Non-US clients will still be able to use Kraken’s staking service. SEC Chair Gary Gensler emphasizes that crypto intermediaries must follow securities laws, regardless of their mode of operation.

Paxos Ordered to Cease Issuance of Binance USD Stablecoin

Paxos has been ordered by the New York Department of Financial Services (NYDFS) to stop the issuance of its Binance USD stablecoin. The NYDFS cited “unresolved issues related to Paxos’ oversight” in its directive. Binance has stated that Paxos will still manage redemptions, but the NYDFS will closely monitor the company’s compliance protocols. This regulatory action on the third-largest stablecoin follows growing scrutiny in the crypto market, including the SEC’s recent declaration that crypto staking services violate securities law. Stablecoins, popular for users taking their first steps into crypto, may face challenges as a security if created with the expectation of making money.

Coinbase CEO Armstrong Stands Firm on Staking’s Non-Security Status

Coinbase CEO Brian Armstrong and CLO Paul Grewal have declared staking to be a non-security and vowed to defend it in court if necessary. This follows the SEC’s enforcement action against Kraken’s staking-as-a-service program, which the SEC deemed a security. Coinbase argues that staking fails the Howey test and that treating staking as a security will limit US consumers’ access to basic crypto services. The company believes that blockchain tech, including staking, will drive US economic growth and that regulation by enforcement is not the solution. SEC Commissioner Hester Peirce has also criticized the SEC’s stance, calling it inefficient and unfair for the emerging industry.

Ethereum Co-Founder Expresses Optimism on Ethereum’s Regulatory Status

Ethereum co-founder Joseph Lubin, the founder of blockchain tech firm ConsenSys, expressed his confidence that Ether won’t be classified as a security in the U.S. Speaking at the Web3 event in Tel Aviv, Lubin stated that classifying ETH as a security is as unlikely as if Uber was made illegal. He also said that he believes the court system in the U.S. would be supportive of arguments that ETH is not a security due to its decentralized nature and multiple use cases that don’t implicate it as such. However, Lubin notes that the current focus of regulators in Washington D.C. is on stablecoins.

Paxos Faces Legal Battle With SEC Over Binance USD Stablecoin Token

The Securities and Exchange Commission (SEC) is planning to sue blockchain company Paxos over the Binance USD (BUSD) token. The SEC alleges that Paxos violated investor protection laws regarding BUSD. Paxos has up to 30 days to respond to the Wells Notice, which alleges that the BUSD token is an unregistered security. However, Paxos has not commented on the issue. The notice to Paxos is part of a more significant effort by the SEC to intensify its enforcement of major crypto players. The SEC reached a compliance agreement with Kraken last week, leading to criticism from Commissioner Hester Peirce.