Bitstamp, a major cryptocurrency exchange, will stop offering ether (ETH) staking to customers in the U.S. by September 25, 2023, reflecting changes in U.S. crypto regulations.
Bitstamp’s decision to end ETH staking for its U.S. customers was announced via an email to Blockworks. The message, written by Bitstamp US CEO Bobby Zagotta, emphasized that this move was a direct response to the current U.S. regulations.
Zagotta clarified that, starting September 25, U.S. customers would no longer receive staking rewards. He assured that other Bitstamp services would not be impacted. He also mentioned that customers would still earn rewards until the specified date. Following that, staked assets would go through an unstaking process. The rewards and initial amounts would then be added to users’ main Bitstamp accounts. This process generally takes a few days, but it could be longer based on network conditions.
The rules and their effects
Bitstamp’s choice isn’t unique but rather shows the wider difficulties U.S. crypto exchanges are dealing with. The rules around services like staking have caused debates. Zagotta highlighted Bitstamp’s commitment to following rules, saying, “We’re very regulated and trusted worldwide. We have a plan to always check the services we offer, considering the changing rules in every place we work.”
The U.S. Securities and Exchange Commission (SEC) is especially watchful over staking. They believe staking plans might be like investment contracts under the Howey test. This test is used to see if some transactions are “investment contracts,” and if they are, they have to follow certain rules.
The SEC showed this by taking legal action against big exchanges like Coinbase and Binance. In the case against Coinbase, the SEC said, “The Coinbase Staking Program, for each of the five stakeable assets, was an investment contract under Howey, and therefore a security, whose offers and sales were subject to registration under the Securities Act.”
Many states also shared the SEC’s worries, and they pointed at Coinbase’s staking. Alabama, for example, was worried about the safety of investors. They said that the “3.5 million staking rewards program accounts nationwide are not insured by the Federal Deposit Insurance Corporation (FDIC) or the Securities Investor Protection Corporation (SIPC).”
Different exchanges and what they’re doing
Bitstamp isn’t the first exchange to adjust its services due to regulatory issues. Earlier this year, the SEC resolved an issue with Kraken, another big crypto exchange, about their staking products. After this, Kraken told Blockworks that they’re “stopping their on-chain staking services for U.S. clients only.” Kraken explained that U.S. clients with assets in the staking program would get them back, and they wouldn’t get rewards anymore. They also couldn’t put more assets, like ETH, into staking.
Summary:
Bitstamp’s decision and similar actions from other exchanges show how complicated it is to handle cryptocurrencies in the U.S. Regulators are dealing with the changes from decentralized finance and what it offers. Exchanges are always adjusting to follow rules. For people who like crypto in the U.S., things are changing fast. It’s still not clear how these rule changes will affect staking and other services for cryptocurrencies in the future.
Important:Â Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.
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