ETH sank to a two-week low recently. However, ETH staking activity was not massively affected.
The crypto space felt the pinch of another US Securities and Exchange Commission (SEC) ruling. According to a February 10 tweet from Wu Blockchain, Kraken, the second-largest exchange in the US, “immediately” ceased its cryptocurrency staking platform-as-a-service for US clients:
“The US SEC accused Kraken of failing to register the offer and sale of its crypto asset staking-as-a-service program and announcing annual investment returns of up to 21 percent. Kraken agreed to stop staking products immediately and pay $30 million in penalties,” read the tweet from Wu Blockchain.
This was done after Kraken was fined $30 million by the SEC, after the former failed to register the offer and sale of its cryptocurrency staking program. Furthermore, Kraken confirmed that it would delist all non-Ethereum [ETH] assets, as delisting ETH would only be possible after the Shanghai Update.
Is the End of Staking Near?
This development came less than 24 hours after Coinbase CEO Brian Armstrong’s speculative tweet, about the future of crypto gambling in the US, sparked FUD in the crypto space. Now that the ruling has been made public, Coinbase has also felt the heat. Its shares plunged about 14% during trading hours on Thursday, its biggest drop since July 2022.
Brian Armstrong took to Twitter again to calm the crypto community, stating that Coinbase would protect its customers from “government reach”:
“We will continue to fight for economic freedom (our mission at Coinbase). Some days, being the most trusted brand in crypto means protecting our customers from government overreach.”
There have been fears about the SEC’s viewing of ETH as a security post in its staking role. SEC Chairman Gary Gensler said that “whether through staking as a service, lending, or other means, cryptocurrency brokers, when offering investment contracts in exchange for investor tokens, must provide the proper disclosures and safeguards required by our securities laws.”
Should ETH Investors Hit the Panic Button?
The news raised doubts in the minds of ETH investors, which was evident in falling ETH balances on exchanges, according to data from Glassnode. At the same time, the number of daily active addresses also dropped by 5%.
Interestingly, staking activity remained immune to a greater extent, as revealed by the increase in ETH staked. Furthermore, the growth of validators on ETH 2.0 has also increased steadily. However, with more regulatory tightening on the anvil, these key engagement metrics could be in the red in the days ahead.
ETH-weighted sentiment has deepened into the negative territory, which signifies investor unease at this point.
Currently, ETH is down more than 5% to trade at $1547.13. It had been trading in a range since February 20, but was in real danger of breaking down.
The Relative Strength Index (RSI) fell below 50 neutral, which was a negative sign. The moving average convergence/divergence line (MACD) passed below the signal line, paving the way for the bears to retake control. In addition, On Balance Volume (OBV) posted lower lows of late, adding evidence to the bearish idea.
By Audy Castaneda
