Bitstamp Halts ETH Staking for US Customers Amid Regulatory Uncertainty
In a move fueled by increasing regulatory uncertainty in the United States, global cryptocurrency exchange Bitstamp has announced to terminate Ethereum staking service for US users.
The exchange has set September 25 as the deadline for users to earn rewards on their staked assets, after which the staked tokens will be withdrawn and returned to users' accounts, Bloomberg reported.
Citing the uncertainty in the regulatory landscape in the US as the reason, Bitstamp announced, "Considering current regulatory dynamics in the US, we've made the decision to discontinue staking for customers residing in the United States."
Crypto Exchanges Buckle Amid SEC Crackdown
As reported earlier, Bitstamp announced discontinuation of seven other cryptocurrencies, including Polygon (MATIC) and Solana (SOL). All the seven cryptocurrencies that Bitstamp delisted are deemed as "unregistered securities" by the US Securities and Exchange Commission (SEC).
The SEC's approach to cryptocurrency regulation has come under intense scrutiny, as it grapples with providing a definitive stance on the status of cryptocurrencies.
The lack of clarity has stirred concerns among users and service providers alike. Notably, the SEC has initiated legal actions against major crypto exchanges such as Binance and Coinbase for allegedly offering unregistered securities and violating securities laws.
Earlier, the US SEC imposed a $30 million penalty on Kraken for offering staking services in February.
The exchange later had to halt its crypto-staking services for US customers.
This decision by Bitstamp adds another layer of complexity, particularly as staking has gained traction within the booming Decentralized Finance (DeFi) sector.
US Regulators Struggle to Provide Clear Crypto Regulations
Central to the regulatory conundrum is Ethereum's native cryptocurrency, Ether. The question of whether Ether should be classified as a commodity or a security remains a pivotal concern.
While the Commodity Futures Trading Commission (CFTC) has consistently labeled Ether as a commodity, the characterization of Ethereum's cryptocurrency has yet to be conclusively defined.
The discontinuation of Ethereum staking for US users underscores the pressing need for clearer regulatory guidelines, ensuring a balanced approach that fosters innovation while safeguarding investor interests.