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Crypto exchange Kraken has started the procedure for withdrawing all staked Ethereum associated with its users in the U.S. amid the Ethereum Shanghai upgrade scheduled today, April 12.
In February, the U.S. SEC charged Kraken for offering an unregistered crypto asset staking-as-a-service program to its U.S. customers. Kraken immediately ended its crypto staking, except staked ETH.
“Starting today, with the exception of staked ether (ETH), assets enrolled in the on-chain staking program by U.S. clients will automatically be unstaked and will no longer earn staking rewards.”
As the Shapella (Shanghai + Capella) upgrade will enable the withdrawal of Ethereum staked on the Beacon Chain to the execution layer, Kraken is withdrawing all staked ETH associated with their U.S. retail customers.
Ethereum influencer and educator Anthony Sassano in a tweet on April 12 noted that Kraken is unstaking ETH by exiting their validators. While validators can exit from Ethereum staking, but their 32 ETH staked and consensus layer rewards will remain on the network until Shapella (Shanghai+Capella) upgrade.
For clarity:
Validators are currently able to exit but the associated 32 ETH stake and consensus layer rewards are not able to be withdrawn (aka moved around) until Shapella goes live in around 12 hours
What Kraken is doing right now is exiting their validators
— sassal.eth 🦇🔊 (@sassal0x) April 12, 2023
Amid regulatory pressure from the SEC on staking services, Kraken and Coinbase are likely to remove staked ETH after the Shanghai upgrade. Coinbase and Kraken have 2.29 million and 1.25 million ETH staked with the platforms. It will have additional selling pressure on Ethereum.
Liquid Staking Derivatives Selling Ahead of Shanghai Upgrade
Institutions and retail investors have started dumping Ethereum (ETH) and Liquid staking derivatives (LSD) ahead of the Ethereum Shanghai upgrade. Lido DAO (LDO), Rocket Pool (RPL, and Frax Share (FRAX) prices fell 8%, 9%, and 6%, respectively. A prominent anonymous crypto trader Sisyphus sold over $400k worth Lido DAO (LDO) tokens and Blockchain Capital sold over 1.5 million LDO and 65,352 Rocket Pool (RPL) tokens today.
Ethereum price is trading at $1,908, down 2% in the last 24 hours. Meanwhile, Lido Staked ETH fell 2%, with the price currently trading at $1,885.
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