Crypto exchange Kraken is back in the game! After nearly two years, they have resumed staking services for their US clients. This is a big deal, especially since the service was paused in 2023 due to a settlement with the Securities and Exchange Commission (SEC).
Now, customers in 37 states can stake 17 different digital assets. This includes popular cryptocurrencies like Ether (ETH), Solana (SOL), and Cardano's ADA (ADA). Kraken was one of the first exchanges to offer staking, starting back in 2019. However, they had to stop these services in February 2023 as part of a $30 million settlement with the SEC.
The return of staking services shows a positive shift in the regulatory environment under new SEC leadership in the United States.
In February 2023, the SEC launched an investigation into Kraken. They claimed the exchange violated US securities laws by not registering its staking service. The SEC argued that Kraken didn’t provide adequate risk disclosures to clients who give up control of their staked tokens to earn rewards.
Former SEC Director of Enforcement Gurbir S. Grewal accused Kraken of promoting “outsized returns untethered to any economic realities” to its clients. After the investigation began, Kraken settled with the SEC. But in November 2023, the SEC sued Kraken, alleging the exchange operated as an unregistered securities broker.
The SEC's lawsuit claimed that Kraken mixed customer funds and acted as an exchange, broker, dealer, and clearing agency without the necessary licenses. In response, Kraken argued that the SEC lacked the authority to regulate cryptocurrency markets, as Congress did not grant that power.
On January 24, Judge William Orrick ruled against Kraken's defense, stating that the SEC does have the authority to regulate digital assets. However, he also allowed Kraken’s legal team to revisit this issue later in the case.