A $92 Billion Crypto Profit Maker Is in Line for a Shake-Up
A lucrative corner of crypto that's fast becoming the lifeblood of the way many networks operate got a shock to the system this week.
The US Securities and Exchange Commission on Thursday signaled a crackdown on platforms offering rewards to their customers via a process called staking, as it reached a settlement with trading platform Kraken for $30 million and won agreement from the exchange to shut down those offerings domestically. It's possible other providers such as larger rival exchange Coinbase Global Inc. may feel the heat and follow suit in discontinuing their own staking services, experts said — or move them offshore.
Staking allows users to lock up their coins on blockchains and help order the transactions that keep the protocols running, earning yields in return at an average of 7.7%, according to an estimate by data provider Staking Rewards based on 176 tracked assets.
The “proof-of-stake” method for running a network became a popular choice for developers in recent years, because it uses much less energy than so-called proof-of-work chains like Bitcoin and potentially allows more people to share in the rewards. Networks including Ethereum, Solana, Tezos, Cosmos and Polygon all rely on some version of staking to operate their chains, with Staking Rewards putting the global value of all staked assets at $91.8 billion as of Friday.
Large exchanges like Kraken, Coinbase and Binance are at the heart of the staking-as-a-service industry, taking on the significant upfront cost and technical know-how for customers in return for a fee. Coinbase, one of the biggest providers of staking-as-a-service at $3.3 billion in value locked, was previously forecast to be in line for around $450 million in related revenue this
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