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Bitstamp to Stop ETH Staking In US Amid SEC Crackdown

Bitstamp said that the decision to discontinue ETH staking amid the crackdown by US SEC and acvoid any kind of scrutiny.
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Bitstamp to Stop ETH Staking In US Amid SEC Crackdown

One of the oldest crypto exchanges Bitstamp announced that it would discontinue ETH staking services for US customers starting September next month. The development comes amid the crackdown by the US Securities and Exchange Commission (SEC).

Crypto staking refers to the practice of earning rewards by committing tokens to support the operation of a blockchain. Ethereum started offering ETH staking in December 2020, much before the blockchain transitioned to a Proof-of-Stake (PoS) network. However, the SEC considers certain products related to staking as unregistered securities.

Bobby Zagotta, CEO of Bitstamp US, mentioned that customers will continue to receive staking rewards until September 25, 2023. After this date, all staked assets will be unstaked, and both rewards and principal will be added to users’ primary Bitstamp account balances. The usual duration for this procedure is a few days, though it might be extended based on network circumstances.

The company is closing its staking features because of the regulations in the US. Zagotta said that Bitstamp is a highly regulated and reliable exchange. They have a system in place to regularly check the services they offer and consider the changing rules in all the places they work.

“Considering current regulatory dynamics in the US, we’ve made the decision to discontinue staking for customers residing in the United States,” said Zagotta.

SEC Crackdown on Bitstamp and Crypto Staking

The US Securities and Exchange Commission has taken legal action against staking service providers in several cases. In lawsuits against both Coinbase and Binance, it argued that the staking programs can be considered investment contracts according to the Howey test.

In June, the agency filed a lawsuit against Coinbase Global Inc., alleging that the company violated its regulations by providing staking services. Crypto exchange Kraken previously halted its staking offerings in the US after announcing a $30 million settlement with the SEC to resolve similar allegations.

Earlier this month, Bitstamp announced a new fundraise with the goal of expanding its derivatives trading services in global markets.

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Bhushan Akolkar

Bhushan is a seasoned crypto writer with over eight years of experience spanning more than 10,000 contributions across multiple platforms like CoinGape, CoinSpeaker, Bitcoinist, Crypto News Flash, and others. Being a Fintech enthusiast, he loves reporting across Crypto, Blockchain, DeFi, Global Macros with a keen understanding in financial markets. 

He is committed to continuous learning and stays motivated by sharing the knowledge he acquires. In his free time, Bhushan enjoys reading thriller fiction novels and occasionally explores his culinary skills. Bhushan has a bachelors degree in electronics engineering, however, his interest in finance and economics drives him to crypto and blockchain.

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