Kraken Starts Taking Back All Staked ETH Before Shapella
Before a big update on Wednesday that will allow payments, Kraken is unstaking its clients’ ETH right away.
The long-awaited Shapella update is almost here, so the cryptocurrency exchange Kraken is getting ready to remove all of its clients’ staked ETH as soon as possible after the update goes live.
The event will be the end of Kraken’s staking as a service product. The company had to shut down the program in February because of rules.
Kraken Withdraws its Stake
In a response on Twitter on Wednesday, Kraken’s support team confirmed that after Shapella goes live, locked ETH on the platform will “automatically enter the unstaking process” for U.S. customers.
When the update happens on April 12 at 10:27:35 UTC block 6209536, Ethereum stakers will be able to withdraw their ETH from the network’s staking contract for the first time since December 2020. Glassnode data shows that more than 1,247,000 of the more than 18 million ETH locked in the contract belong to Kraken.
On Twitter, the well-known Ethereum teacher sassal.eth said that Kraken’s staking withdrawals have already started before the upgrade, and that other validators can also take. But the exchange won’t be able to take out its original 32 ETH stake deposit or the rewards that come with it until after Shapella happens.
Some investors have worried that allowing transfers could cause a huge amount of ETH to flood the market, which could cause the price of ETH to drop. But data from IntoTheBlock shows that so far, only a small number of validators have decided to pull out their stake.
“What Kraken is doing right now is exiting their validators,” he said. “They are doing this because of the SEC action brought against Kraken’s Ethereum staking product back in February.”
SEC VS Staking
Two months ago, Kraken was fined $30 million by the Securities and Exchange Commission (SEC) for not registering its staking product as a security. Even though industry leaders and lawmakers who support cryptocurrencies were not happy with the enforcement action, other exchanges like Coinbase are ready to be sued if they offer a similar product.
Retail clients can easily receive staking rewards without technical knowledge or the 32 ETH required to run a personal validator with staking as a service. Gary Gensler, the head of the SEC, has said that these services and proof of stake coins in general may be considered securities by the Howey Test.
