As a result of the SEC’s scrutiny of crypto staking, Ethereum’s user activity may decrease in parallel with the ETH price.
Kraken agreed on February 9 to pay $30 million to resolve SEC allegations that it violated securities laws by selling crypto staking services to individual investors in the United States.
Specifically, the announcement drove down the values of a large number of proof-of-stake (PoS) blockchain project tokens. Ethereum, which adopted a system based on staking in September 2022, also suffered.
On February 9, ETH’s price dropped over 6.5% to around $1,525, marking the worst single-day decrease since December 16, 2022.
The SEC’s campaign on crypto staking starts as Ethereum awaits the March release of its Shanghai network update.
The upgrade will finally enable Ether validators to withdraw their assets with yield incentives.
Multiple experts, including the chief investment officer of Bitwise Asset Management, Matt Hougan, view Shanghai as a positive event for Ether.
“Many investors who want to stake ETH and make a return are now on the sidelines. After all, the majority of investment strategies cannot sustain an indefinite lock-up,” Hougan stated in his January letter to investors.
In addition, some experts argue that prohibiting Ether-staking services would drive consumers to leave Ethereum.
“If the SEC prohibits crypto staking for the general public, then the most of Ethereum validators will have to shut down,” claims independent analyst Ripple Van Winkle.
Also Read: SEC Commissioner Criticizes The Commission’s Recent Decision
Disclaimer: The information provided in this article is for informational purposes only and should not be construed as financial or investment advice. Cryptocurrency investments are subject to market risks, and individuals should seek professional advice before making any investment decisions.
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