Why the SEC Crackdown is Good for Staking

February 19, 2023

The space is divided. Is the SEC crackdown good or bad for staking?

For the tl;dr, check out the key takeaways from the full article:

  • Kraken shutting down its Staking Program and being charged by the SEC for offering and selling unregistered staking-as-a-service securities could set a precedent for other crypto platforms operating in the same manner

  • SEC's charges against Kraken weren't a strike against staking but rather against business practices of platforms offering modified staking products, which are considered securities

  • Expanding Qualified Custodial requirements to include crypto drastically reduces the number of crypto platforms that can legally operate, further centralizing power amongst select crypto platforms that become Qualified Custodians

  • Custodial requirements add additional layers of safety for crypto investors as it requires custodial platforms to segregate funds, provide yearly disclosures and public audits, and ensure customer funds are accessible in case of bankruptcy

  • Custodial requirements are likely to reduce the number of custodial crypto platforms operating and adversely push retail and institutions on-chain via non-custodial solutions or running validators, ultimately improving decentralization

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