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Ether prices fell on Friday, extending losses from the previous session as fears of a US regulatory crackdown on crypto staking weighed on investors.
Ether led the cryptocurrency lower, with the price dropping more than 2% on Friday morning to $1,543.08, according to Coin Metrics, after falling 5% the previous day. Earlier in the day, it fell to its lowest level since January 25. Bitcoins the loss was slightly lower. It was last down less than 1% at $21,829.97, but is still trading at its lowest levels since late January.
Ether Falls Amid Latest Crypto Regulatory Scare
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The decline started after the Kraken crypto exchange closed its staking program in a $30 million settlement with the Securities and Exchange Commission. Earlier in the week, Coinbase CEO Brian Armstrong sounded the alarm on a possible regulatory crackdown on staking and staking services in the United States that may be underway.
“Kraken’s decision certainly casts a grim outlook for many crypto exchanges that offer staking as a service, but the effects on PoW cryptos, such as bitcoin and litecoin, shouldn’t be as severe as the effects on PoS cryptos in the future,” said Yuya Hasegawa, crypto market analyst at Japanese bitcoin exchange Bitbank.
The angst in the crypto market centers around the staking services offered by exchanges like Kraken as well as Coinbase. Staking is when investors lock up their cryptocurrency for a period of time to earn interest on it and to earn a position as a network validator, which means they have the ability to verify and to process transactions.
Staking is only available on networks like Ethereum that operate using the “proof-of-stake” protocol. Bitcoin works by using “proof of work” to confirm transactions.