If you’re not caught up on the latest FUD, here’s a quick rundown. 🟢
Shortly before Wednesday’s Litepaper was e-mailed out and well after editing, $COIN CEO Brian Armstrong sent out this Tweet:
1/ We're hearing rumors that the SEC would like to get rid of crypto staking in the U.S. for retail customers. I hope that's not the case as I believe it would be a terrible path for the U.S. if that was allowed to happen.
— Brian Armstrong (@brian_armstrong) February 8, 2023
Initial market responses were ‘meh’, no major selling or FUD in price action.
That was until yesterday’s cheeky announcement from SEC Chairman Gary ‘Guns Out’ Gensler:
Today @SECGov charged Kraken for the unregistered offer & sale of securities thru its staking-as-a-service program.
Whether it’s through staking-as-a-service, lending, or other means, crypto intermediaries must provide the proper disclosures & safeguards required by our laws.
— Gary Gensler (@GaryGensler) February 9, 2023
Long story short, staking through Kraken is no longer allowed for U.S. citizens, and Kraken paid a $30 million fine. 💸
And then crypto markets took a big ol’ FUD dump.
SEC Commissioner Hester Peirce, affectionately known as ‘Crpyto Mom’, was not a fan and issued a dissent.
My thoughts on today's Kraken settlement: https://t.co/mijt3MNN4U
— Hester Peirce (@HesterPeirce) February 9, 2023
Coincidentally, BlockFi’s $100 million settlement was just a year ago, in February 2022 – huh.
From a subjective point of view, many in the crypto community are calling for blood.
From an objective point of view – it’s not really that bad. It’s not great, but it’s not the end of the crypto world, either.
The execution, delivery, messaging, and aesthetics could have been waaaaaaay better.
And Gensler does make a good point about the staking rewards and disclosures needing to be made.
For example: If you stake $ADA.X on Kraken, you get the rewards once a week. However, staking ADA in the native Cardano wallet, Daedalus, you are awarded at the end of every epoch – which is 5 days.
At once a week, Kraken gives you your ADA reward – 52 times a year. Cardano’s native staking reward interval is every 5 days – 73 awards a year.
That’s nearly a -28% loss in the frequency of your rewards – where does that go, and who gets it? 🤔
We’ll update you as this topic continues to unfold.