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Bitstamp said it will discontinue its ether staking program for customers in the US in response to ”regulatory dynamics.”
The move by the cryptocurrency exchange, which comes into effect on Sept. 25, follows increased scrutiny from the U.S. Securities and Exchange Commission (SEC) on staking services.
The watchdog considers staking to be potential investment contracts that should be subject to securities regulation. The decision aligns with Bitstamp’s earlier move to delist seven tokens due to regulatory concerns.
Staking, a practice involving pledging tokens to support blockchain operations and earning rewards in return, has been a significant feature of the crypto landscape. The move marks the end of staking rewards for US customers.
The discontinuation of staking services for US users aligns Bitstamp with its existing policies in countries like Canada, Japan, Singapore, and the United Kingdom, where similar services are unavailable.
Bitstamp Move Mirrors Broader Trend
The exchange’s move to end its ether staking program for US users mirrors a broader trend of exchanges reevaluating their offerings amidst regulatory pressure.
Bitstamp’s decision to discontinue seven altcoins, including Axie Infinity, Chiliz, Decentraland, and Solana, was also prompted by regulatory concerns after the SEC classified the tokens as unregistered securities in lawsuits against crypto exchanges Binance and Coinbase.
Update for our US users 📢
Starting August 29: AXS, CHZ, MANA, MATIC, NEAR, SAND, and SOL trading will be halted after evaluating recent market developments.
Execute any open trades. Holding and withdrawing tokens afterwards will be unaffected.
More info:…
— Bitstamp (@Bitstamp) August 8, 2023
The debate over how Ether (ETH) should be classified remains a central issue in the regulatory discourse. While some consider Ether a commodity, SEC Chair Gary Gensler has indicated that in the crypto space, only Bitcoin can be classified as a commodity.
Staking Programs in the Crosshairs
The SEC’s focus on staking programs has intensified throughout the industry. The lawsuit against Coinbase and Binance emphasizes the agency’s argument that staking programs can qualify as investment contracts, making them subject to securities regulations. Kraken’s decision to halt its U.S. staking services and settle with the SEC for $30 million underscores the seriousness of the regulatory pressures.
Coinbase, the largest U.S. crypto platform, has countered the SEC’s lawsuit, asserting that it lacks merit. In addition, state regulators from California to New Jersey have called for the suspension of Coinbase’s staking services.
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