A crypto practice in regulators’ crosshairs

Crypto companies offering their customers eye-popping yields through so-called “staking” products are earning the ire of the US securities regulator who says such services should be registered. Crypto exchange Kraken on Feb 9 agreed to shutter its staking service for US customers and pay $30 million in penalties, as part of a settlement with the regulator, and investors are worried a broader ban on the practice could follow. What is staking? Staking is a process in which cryptocurrency holders volunteer to take part in validating transactions on the blockchain in other words, checking that the ledger all adds up. The checking is not done by individuals, but by computers in the blockchain network, often via third-party staking services. In return, validators, who cannot use their cryptocurrencies involved in the validating process for a period of time, receive a share of the transaction fees or newly created cryptocurrencies. That reward is then passed on to customers at centralised exchanges who agree to stake their assets.