Kraken Resumes Staking Services for US Clients

In a significant move for both Kraken and its US-based customers, the popular cryptocurrency exchange has resumed its staking services after nearly two years of suspension. This decision marks the return of a key feature that had been paused following the exchange’s settlement with the US Securities and Exchange Commission (SEC) in 2023.

Starting in January 2024, US clients in 37 states can now access staking services for 17 digital assets, including prominent tokens like Ethereum (ETH), Solana (SOL), and Cardano (ADA). The resumption of these services signals a shift in the regulatory landscape and the ongoing evolution of cryptocurrency platforms in the US.

Kraken was among the first crypto exchanges to offer staking services, launching the feature back in 2019. However, the exchange was forced to pause the service in February 2023 after reaching a multimillion-dollar settlement with the SEC over its staking operations. The SEC had raised concerns that Kraken’s staking program violated US securities laws, specifically arguing that the service should have been registered with the agency.

As part of the settlement, Kraken paid $30 million and agreed to cease offering staking services to US clients. This decision came after a probe by the SEC, which claimed that Kraken had failed to properly disclose risks to customers, who relinquish control of their staked assets to validators in exchange for rewards.

Kraken’s Staking Comeback: What Does This Mean?

The return of staking services to Kraken’s US customers is a significant step for the exchange, especially considering the heightened regulatory scrutiny in the crypto industry. With the new SEC leadership under President Joe Biden’s administration, Kraken’s resumption of these services may reflect a more favorable regulatory environment for crypto exchanges.

In total, Kraken is now offering staking for 17 different cryptocurrencies. In addition to Ether, Solana, and Cardano, customers will have access to staking for other popular assets, broadening the scope of opportunities available on the platform.

Kraken’s move could be interpreted as a sign that the regulatory climate in the US is becoming more favorable toward certain crypto services. The resumption of staking services suggests that exchanges may be able to work more effectively within the regulatory framework without resorting to shutting down entire product offerings.

Kraken’s legal battle with the SEC is far from over. While the settlement in February 2023 put an end to the staking services issue, Kraken continued to face legal hurdles. In November 2023, the SEC filed a lawsuit against Kraken, alleging that the exchange was operating as an unregistered securities broker by co-mingling customer funds and fulfilling multiple roles (exchange, broker, dealer, and clearing agency) without proper licensing.

Kraken has pushed back against the SEC’s allegations, arguing that the agency overstepped its authority by attempting to regulate the crypto market. The exchange contends that Congress has not granted the SEC the power to regulate digital assets and has filed motions in court to challenge the SEC’s jurisdiction over the crypto space.

The Latest Development: SEC’s Authority Under Scrutiny

In a January 2024 ruling, US District Judge William Orrick dismissed Kraken’s argument that the SEC did not have the authority to regulate digital assets. However, the judge indicated that Kraken’s legal team could revisit this issue at a later stage in the ongoing lawsuit.

While this ruling may seem like a setback for Kraken, it underscores the larger legal battle over how digital assets are regulated in the US. This case could potentially reshape how crypto companies navigate the SEC’s enforcement actions and how the agency defines its regulatory scope in the evolving digital asset landscape.

Kraken’s return to staking services for US clients represents a major milestone for both the exchange and the broader cryptocurrency market. Despite facing significant legal challenges and ongoing scrutiny from the SEC, Kraken’s ability to resume staking activities points to a shift in how regulators are approaching crypto services. While the company remains in the midst of a lawsuit regarding its operations, the resumption of staking suggests that, with the right compliance measures, exchanges can still find a way to work within the regulatory framework.

As the legal battle continues, it will be crucial to watch how the SEC’s stance on cryptocurrency evolves, and whether this will create a clearer path forward for other crypto companies facing similar regulatory pressures.