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Bitstamp Ends Ethereum Staking in US as SEC Keeps Clamping Down

Published August 24, 2023 1:28 PM
Teuta Franjkovic
Published August 24, 2023 1:28 PM
Key Takeaways
  • Bitstamp to terminate staking service in the US on September 25.
  • Staking is viewed as an unregistered security within SEC crypto crackdown.

Cryptocurrency exchange Bitstamp will  stop offering Ethereum (ETH) staking services to users in the United States in a month.

“Customers will continue earning staking rewards up until September 25, 2023, and after that, all staked assets will be unstaked. Rewards, along with the principal, will be credited to users’ main Bitstamp account balances,” explained  Bobby Zagotta, U.S. CEO and global CFO at Bitstamp.

Zagotta also added it could take a few days for the modifications to appear on users’ balances.

In addition, Bitstamp stated  that customers’ primary account balances would be rewarded with incentives such as the initial amount deposited. It also said that, depending on the state of the network, this process could take several days.

Changes Linked to Regulatory Pressures

Bitstamp website  states that a 15% commission is applied to all staking payouts – the monthly return for staking Ethereum is 4.50%; in contrast, the monthly payout for staking Algorand is 1.60%.

With thIS change, the us will now join Canada, Japan, Singapore, and the UK in not offering Bitstamp staking services.

Bitstamp choice was made in response to U.S. Securities and Exchange Commission (SEC) moves to examine websites providing staking services.

In litigation SEC launched against cryptocurrency businesses in June, it asserted that staking services provided by Coinbase and Binance constitute securities.

As part of a $30 million settlement , US regulator also ordered Kraken to stop providing its staking service in the US in February. Any of those activities might have had an impact on Bitstamp’s choice to disable Ethereum staking for users in the States.

Bitstamp To Delist 7 American Tokens

In response to changes in American regulation, Bitstamp earlier announced  on August 8 that it will stop trading seven cryptocurrency coins in the United States.

According to recent legal developments in the US, at least seven alternative currencies would no longer be available in the nation. Solana, Decentraland, Polygon, Near, Axie Infinity, Chiliz (CHZ), Chiliz (CHZ), and The Sandbox were interested by this move.

SEC declared  all seven tokens will be unregistered securities in June as part of its legal actions against cryptocurrency exchanges Binance and Coinbase, despite a lack of explanation for the suspension of trade.

The decision appeared to be a response to the ongoing SEC lawsuits against Binance and Coinbase stated above, even though Bitstamp did not specifically reference the developments in question.

By August 29, 2023, US customers will not be able to trade these coins.

ETH Staking In the Rise

Despite last week crypto market collapse, on-chain data for the second-largest digital asset globally indicate a rising resilience.

Even though there were worries that the Shanghai-Capella fork would have the opposite effect on price, it has merely boosted demand for ether (ETH). Instead, utility and demand have skyrocketed, as others correctly expected.

Total Value Staked for the asset has risen steadily, reflecting an underlying demand. According to data , the amount increased from 26.3 million ETH to 27.8 million, up by 5.7% on a monthly basis.

Investors are encouraged to pay less attention to short-term volatility as a result of the expansion of liquid staking tokens (LSTs).

Ether Mostly Referred to As a Commodity

The native cryptocurrency of the Ethereum blockchain, Ether, is second in terms of market capitalization to Bitcoin.

Whether to classify ETH as a security or a commodity is a key concern in the current regulatory landscape in the U.S.

While SEC Chair, Gary Gensler, stated at an April hearing that Bitcoin was a commodity but didn’t say whether ETH could be classified as a security, the Commodity Futures Trading Commission has consistently referred to Ether as a commodity.

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