• The SEC has urged US-based crypto exchanges to withdraw staked Ethereum (ETH) in order to comply with securities laws.
• Exchanges like Kraken, Coinbase and Gemini are leading entities waiting to withdraw their ETH tokens.
• After the Shapella Upgrade, Kraken’s support team confirmed that it was processing withdrawals for its U.S. clients immediately.
SEC’s Regulatory Actions Push US-Based Exchanges to Withdraw Staked Ethereum
The U.S Securities and Exchange Commission (SEC) has urged U.S.-based crypto exchanges offering staking programs and interest-bearing products to comply with securities laws, which requires them to withdraw staked Ethereum (ETH). As a result, 682,552 ETH of the 874,199 ETH tokens pending withdrawals as of press time are being withdrawn by three major exchanges—Kraken, Coinbase and Gemini—which account for roughly 78% of entities waiting to withdraw their staked ETH .
Kraken Leads Entities Processing Withdrawals
Leading these entities is Kraken which wants to withdraw 556,272 ETH worth about $1.17 billion from its customers’ accounts in the U.S.. Its support team recently confirmed on Twitter that it was processing withdrawals for its U.S. clients immediately after the Shapella Upgrade was completed and that any locked ETH would automatically enter the unstaking process afterwards as well.
SEC Fines Kraken $30 Million For Failing To Register Staking Product As A Security
In February 2021, Kraken faced a financial penalty of $30 million from the SEC for failing to register its staking product as a security before offering it publicly in 2018 and 2019; however, no investors were reported as having been harmed by this incident at the time according to Kraken’s statement regarding this matter . In response to this development ,the exchange declared that it would end its staking service for customers based in the United States .
Kraken Offers Reparations To Affected Customers
In addition ,Kraken offered reparations such as compensatory payments or additional tokens for affected customers who had participated in its staking program between September 2018 and October 2019 before announcing plans to terminate its services related thereto . It also indicated that it would cooperate with relevant authorities if additional cases were filed against it concerning other issues linked with digital asset activities within or outside America .
Overall ,in light of recent regulatory developments pertaining specifically targeted at US-based crypto exchanges offering staking programs ,these companies have been forced into withdrawing their respective stakes held by their customers in order remain compliant with applicable securities laws while some have taken steps towards providing reparation payments or additional tokens for those who had participated in their respective programs duringa certain period of time prior their termination .