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Bitstamp, one of the oldest crypto exchanges, has announced that it will suspend its ETH staking service for US customers starting from September. The move comes in the midst of the Securities and Exchange Commission’s (SEC) crackdown on crypto staking.
Service Suspension Only Applies to Bitstamp US
Crypto staking refers to the process of depositing tokens or coins into a blockchain to support its operations and earn rewards. While staking for the Ethereum Blockchain was introduced back in December 2020, long before the transition to the Proof of Stake (PoS) consensus mechanism, the SEC’s classification of certain staking products as unregistered securities has impacted this process.
Bobby Zagotta, CEO of Bitstamp US, stated that customers will continue to receive staking rewards until September 25, 2023. After this date, all staked ETH will be removed, and both the rewards and principal will be added to users’ primary Bitstamp account balances.
While Bitstamp is closing its staking feature due to existing regulations in the US, Zagotta emphasized that Bitstamp is a highly regulated and trustworthy crypto exchange, and their services are regularly audited and comply with rules that vary by region. Zagotta stated, “Considering the current regulatory dynamics in the US, we have decided to suspend the staking service for our customers residing in the US.”
SEC’s Blow to Crypto Staking
The SEC has initiated legal actions against various crypto exchanges, trading platforms, and service providers offering crypto staking services in several cases. In two separate cases filed against Coinbase and Binance, the SEC argued that staking programs could be considered securities under the Howey Test.
In June, the US federal regulatory agency accused Coinbase of violating regulations by offering staking services. Prior to this, the SEC targeted Kraken with a similar claim, and the crypto exchange reached an agreement with the SEC, paying $30 million in compensation and suspending its staking service in the US.
