The United States Securities and Exchange Commission is ramping up pressure on the crypto sector. On Feb. 9, the SEC reached a $30 million settlement with Kraken<\/a> over the centralized staking program it offered to its users.<\/p>\n The news of the crackdown sent the price of Bitcoin (BTC<\/a>) to a three-week low<\/a> as investors became fearful of the regulatory enforcement. Ether\u2019s (ETH<\/a>) price also corrected on the news, cementing the token\u2019s worst-performing day of 2023<\/a>. <\/p>\n While the overall crypto market was down after the SEC announcement, bright spots arose, with decentralized liquid staking tokens LDO, RPL and FXS quickly rebounding from their sharp corrections. <\/p>\n According to Crypto Twitter analyst Korpi, Kraken and Coinbase represent<\/a> 33% of all staked Ether, and if U.S.-based centralized exchanges are \u201cforced\u201d to cease offering staking-as-a-service programs, liquid staking derivatives providers could absorb that market share. <\/p>\n Based on recent tweets, crypto traders are well aware of this potential outcome, and this could be part of the reason for the short-term rebound seen in Lido\u2019s LDO, Rocket Pool\u2019s RPL and Frax\u2019s FXS. Let\u2019s take a look at some fundamental data points that might back their bullish thesis. <\/p>\n The aftermath of Kraken\u2019s capitulation to the SEC could spill over to other centralized exchanges<\/a>\u00a0that offer staking as a service. While not all SEC commissioners agreed<\/a> with the crackdown on Kraken, the settlement puts other companies in the hot seat<\/a>, such as Coinbase\u00a0and its\u00a0Earn program. <\/p>\n On Feb. 8, Coinbase CEO\u00a0Brian Armstrong<\/a> described how disastrous he believes the SEC\u2019s crackdown on staking would be for U.S. investors. <\/p>\n 1\/ We’re hearing rumors that the SEC would like to get rid of crypto staking in the U.S. for retail customers. I hope that’s not the case as I believe it would be a terrible path for the U.S. if that was allowed to happen.<\/p>\n \u2014 Brian Armstrong (@brian_armstrong) February 8, 2023<\/a><\/p><\/blockquote>\n The SEC\u2019s decision to regulate cryptocurrencies through enforcement actions rather than clear regulations caught the ire of the crypto community<\/a>\u00a0due to its \u201danti-crypto\u201d\u00a0actions.<\/p>\n If a wider crackdown on centralized staking services ensues, that market share of stakers could be absorbed by decentralized providers like Lido, Rocket Pool and others. In the aftermath of the SEC\u2019s decision, Rocket Pool briefly reached $1 billion<\/a> in total value locked (TVL)<\/a>. <\/p>\n Lido, the largest liquid staking provider, has over $8.5 billion in TVL. And while the platform did not see an initial boost in usage after the SEC\u2019s decision, large inflows may begin as users seek new places to stake their Ether. <\/p>\n The crypto market may be down since the SEC decision, but RPL and LDO prices are up. Within 24 hours of the Feb. 9 SEC announcement, RPL\u2019s price increased by 14.5% and LDO gained 13.2% before correcting to $2.39. <\/p>\n The increase in prices seems to be from large whales accumulating major amounts of tokens.<\/p>\n The #SEC<\/a> announced that #Kraken<\/a> will end US crypto-staking service and pay $30M to settle.<\/p>\n Which may benefit liquid staking derivatives tokens like $RPL<\/a> and $LDO<\/a>.<\/p>\n We noticed that some addresses were accumulating $RPL<\/a> and $LDO<\/a>.<\/p>\n 1.Centralized staking could be banned for U.S.-based investors<\/h2>\n
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Decentralized staking as a service could solve securities issues<\/h2>\n
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