10 February

The Block: Kraken settles SEC charges over its staking program

Kraken to Shut US Crypto-Staking Service, Pay $30M Fine in SEC Settlement

“Crypto exchange Kraken will “immediately” end its crypto staking-as-a-service platform for U.S. customers and pay $30 million to settle Securities and Exchange Commission (SEC) charges it offered unregistered securities, the U.S. agency announced Thursday.

In a blog post, Kraken said it would automatically unstake any assets staked by U.S. clients except for staked ether, which won’t be unstaked until after the Ethereum Network’s Shanghai upgrade takes effect. U.S. clients will also be unable to stake new assets (including ether). Non-U.S. clients are unaffected.

The complaint alleges that Kraken touts that its staking investment program offers an easy-to-use platform and benefits that derive from Kraken’s efforts on behalf of investors, including Kraken’s strategies to obtain regular investment returns and payouts.

Whether it’s through staking-as-a-service, lending, or other means, crypto intermediaries, when offering investment contracts in exchange for investors’ tokens, need to provide the proper disclosures and safeguards required by our securities laws. Today’s action should make clear to the marketplace that staking-as-a-service providers must register and provide full, fair and truthful disclosure and investor protection.

Coinbase (COIN) also offers staking for its customers, as do an array of decentralized protocols including Lido.”

CDCROP: Growth Economy Markets Indices (Pixabay)

Liquid Staking Tokens Rally as Kraken Shuts Staking Service to Settle With SEC

“The settlement between Kraken and the SEC might be a boon for decentralized rivals to grab market share from centralized service providers. The rally served as a counterweight to Thursday’s downturn in the broader crypto market.

The LDO governance token of Lido Finance, the largest liquid staking protocol with some $8.4 billion of staked ether (ETH) on the platform, jumped 10.4% in an hour, according to data by CoinGecko. Competitor Rocket Pool’s RPL jumped 7.3%. Smaller liquid staking platform’s tokens such as Persistence’s pSTAKE and StaFi’s FIS gained 6.7 and 11.4%, respectively.

Staking on centralized exchanges takes up about 28% of all staked ether, data by Dune Analytics shows.”

US authorities allegedly using banks to crack down on crypto – Nic Carter

‘Operation Choke Point 2.0’: Banks Under Pressure from U.S. Authorities to Cut Ties with Crypto Firms

“United States authorities are allegedly discouraging banks from offering services to the crypto industry.

The alleged strategy consists of isolating the traditional financial system from the crypto market by relying on ‘multiple agencies to discourage banks from dealing with crypto firms,’ with the goal of leading crypto businesses to become “completely unbanked,” according to Nic Carter — co-founder of venture firm Castle Island and crypto intelligence firm Coin Metrics.

Regulators threaten and bully bank leadership behind the scenes, then publish public ‘guidance’ stressing that banks are still free to custody crypto or service crypto clients. In reality, they’re not free to do this, by any means.

The real objective is to stem the growth of crypto any way they know how.

The consequences for the crypto industry could range from reducing retail holders’ ability to exchange coins for the dollar in addition to crypto exchanges closing operations in the U.S. market and a lack of access to financial innovation, said Carter. ‘There are no positives from this.‘

The U.S. authorities’ techniques are not new. In 2013, a federal government regulatory initiative called Operation Choke Point targeted a variety of “high-risk” industries and heightened supervision of financial institutions providing services to these businesses.”

Stablecoin Issuer Tether Reports $700M Profit, Complete Exit From Commercial Paper

“The majority of its holdings ($39.2 billion) were in U.S. Treasury bills as of Dec. 31, according to an attestation from BDO. The rest of its $67 billion of assets were distributed across money market funds, cash and other items. Secured loans were reduced by $300 million, in line with a plan to reduce them to zero this year.

Tether had set a goal for eliminating commercial paper – a type of short-term, unsecured debt – by the end of 2022, which it met. Tether’s assets as of Dec. 31 stood at $67 billion with liabilities of $66 billion, almost all of which relates to digital tokens issued.“

Flux Finance Launches Lending Token Collateralized by U.S. Treasurys

“Following the recent launch of Ondo Finance’s U.S. Treasury-backed Government Bond Fund (OUSG), Flux Finance has launched a decentralized lending protocol that allows users to deposit USDC or DAI into Flux’s protocol, which is backed by OUSG, and, in turn, receive fUSDC or fDAI, two derivative tokens representing the USDC and DAI on Flux. The fUSDC and fDAI tokens can then be used as collateral at lending and derivatives protocols.

The interest in yield from tokenized U.S. Treasurys comes as lending rates for major DeFi platforms struggle after 2022’s chaotic crypto market, and the Federal Reserve continues to raise interest rates, making conventional assets potentially more alluring than DeFi.”

Popular Rihanna Song Offered as NFT With Royalty Sharing Ahead of Super Bowl

“The new platform works with rights holders, including artists, producers and writers, to divest a percentage of their streaming royalty rights, which are offered as fractionalized NFTs. Music producer Deputy, who collaborated with Kanye West, Travis Scott and WondaGurl to produce Rihanna’s hit 2015 single “B**** Better Have My Money,” is granting a portion of his streaming royalties to collectors through anotherblock.

The 300 royalty-linked NFTs were available for purchase beginning at 5 p.m. GMT/12 p.m. EST on Thursday at $210 a piece. Each holder will receive “a portion of 0.0033 % of the streaming royalties” for the song, the company said. Holders are expected to receive their first royalty payout on Feb. 16, the company said, and will receive payments every six months based on streaming revenue.

The NFT drop comes ahead of Rihanna’s Super Bowl LVII performance on Sunday.”

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