Crypto exchange Kraken will end its U.S. staking operation and pay a $30M fine to the SEC to settle an enforcement action alleging the firm sold unregistered securities.

 The SEC accused Kraken of failing to register the offer and sale of its crypto staking-as-a-service program. The program allowed investors to stake their crypto assets in exchange for returns of up to 21%.

• According to the SEC, U.S. investors had more than $2.7B worth of crypto assets in Kraken’s staking program, earning the crypto firm about $147M in net revenue.
• In a statement, SEC chair Gary Gensler said crypto firms offering investment contracts in exchange for investors’ tokens must provide the proper disclosures and safeguards required by U.S. securities laws.
• Kraken said it would discontinue its on-chain staking services to U.S. clients but would continue the service for non-U.S. clients.
• On news of the settlement, Coinbase shares fell more than 14% on Thursday, closing at $59.63.
  • Coinbase CEO Brian Armstrong said he believed that the SEC’s action in retail crypto staking would be a terrible path for the U.S.