Ether Price Faces Possible 20% Correction As SEC Goes Hard On Crypto Staking
Ether saw its worst daily price performance in 2023 as the US Securities and Exchange Commission (SEC) started cracking down on crypto staking. Kraken was at the receiving end of the SEC’s latest stance as the exchange was barred from offering crypto staking.
The issue started on Thursday when Kraken shelled out $30 million to settle the allegations against it for violating securities laws by offering crypto staking services in the United States. The new development significantly impacted the prices of most proof-of-stake (PoS) tokens, with Ethereum heavily affected.
Recall that Ethereum recently switched to the PoS consensus algorithm in September 2022. On the same day that Kraken agreed to pay the settlement, the price of Ether plunged by almost 6.5% to trade at $1,525, which signifies the largest single-day drop since December 16, 2022.
Can Ethereum Survive The New Crackdown?
Furthermore, the SEC crackdown on crypto staking comes amid Ethereum’s wait for the launch of a critical network update, the Shanghai upgrade.
The Shanghai upgrade will allow Ether validators to withdraw funds alongside the yield rewards. According to the chief investment officer at Bitwise Asset Management, Matt Hougan, several investors who want to stake Ether are sitting on the sidelines as they seek a transparent yield withdrawal system.
He added that most investment tools do not support indefinite lockups, and once this is removed, the number of investors willing to stake their Ether will increase. However, the SEC’s latest action has seen many raising doubts about the future of crypto staking in the United States.
Coinbase’s CEO, Brian Armstrong, fears that the securities watchdog may ban staking for retail investors at any time. Other industry experts opined that banning Ether staking would see users moving away from Ethereum altogether.
According to Ripple Van Winkle, an independent analyst, if the regulator were to ban crypto staking from the public, most of the validators on the Ethereum network would have to leave. Ether is down 3% and trades at $1,526 at the time of writing, according to Coingecko data.
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