Alongside legal regulations in the cryptocurrency market, work is also being done for sector-specific branches. Proof of Stake Alliance (POSA), a non-profit organization representing companies in the stake industry, released an updated version of stake principles for companies on November 9th.
Notable Step from POSA
POSA represents 15 different companies in the stake industry, including Alluvial, Ava Labs, Blockdaemon, Coinbase, Credibly Neutral, Figment, Infstones, Kiln, Lido Protocol, Luganodes, Methodic, Obol, Polychain, Paradigm, and Staking Rewards.
The stake principles were first published in 2020. According to the blog post announcing these principles to the public, service providers are aimed to be industry-focused solutions that can address the concerns of legal regulators and promote notable practices in the sector.
According to the previous regulations, stake providers should not provide investment advice, guarantee the amount of stake rewards that can be obtained, or claim to have control over a protocol in their marketing materials.
Instead, companies should explain that their products provide access to a protocol and enhance user security. Furthermore, the presented principles stated that stake providers should use non-financial terms such as “stake reward” instead of financial terms like “interest” in their marketing methods.
Three New Principles Added
The announcement shared on November 9th stated that three new principles would be added. Firstly, betting providers will be encouraged to provide transparent communication to ensure that investors have all the necessary information to make informed decisions. Secondly, investors should be able to decide how much of their assets they want to stake, as stake assets are intended to promote user ownership. Finally, stake providers should have clearly defined responsibilities and should not manage or control liquidity for investors.
The crypto stake industry continues to be criticized by some legal regulators who claim that it serves as a cover for unregistered securities offerings. Kraken’s stake service was terminated by the United States Securities and Exchange Commission on February 9th, and the exchange was ordered to pay $30 million in compensation for allegedly violating securities laws.
