POSA Unveils Updated Staking Principles to Address Regulatory Concerns and Ensure Ethical Practices
Summary:
The Proof of Stake Alliance (POSA) has released an updated version of its guiding principles for crypto staking, first introduced in 2020. Endorsed by major staking industry firms, these principles provide a framework for ethical practices and addressing regulatory concerns. The updated principles highlight the importance of clear communication, user ownership of staked assets, and well-defined roles for staking providers. This comes amidst disputes around whether staking services constitute securities, a view questioned by regulators but refuted by POSA member, Coinbase.
The Proof of Stake Alliance (POSA), representing firms within the crypto staking sector, has released a revised set of "staking principles" on November 9. This updated version is endorsed by Ava Labs, Alluvial, Coinbase, Lido Protocol, Paradigm, along with ten other notable staking industry businesses.
POSA is a hub for 15 diverse staking industry companies such as Alluvial, Ava Labs, Blockdaemon, Coinbase, Credibly Neutral, Figment, Infstones, Kiln, Lido Protocol, Luganodes, Methodic, Obol, Polychain, Paradigm, and Staking Rewards. These staking principles, initially launched in 2020, are designed to be an "industry-led solution" adhered by providers to allay regulatory concerns and foster proper industry practices.
The previous principle version stated that staking providers should refrain from providing investment advice, assuring specific staking reward figures, or suggesting control of a protocol through their promotional materials. Instead, they should stress that their offerings grant access to a protocol and help users improve security. Additionally, it recommended that staking providers use non-financial descriptors like "staking reward" rather than financial jargon such as "interest" in their marketing content.
The announcement on November 9 unveiled three additional principles. Firstly, staking providers are urged to communicate clearly to give users needed information to make wise decisions. Secondly, users should have the freedom to select the portion of their assets they want to stake, promoting "user ownership of staked assets". Lastly, staking providers should establish "well-defined responsibilities" and avoid managing or controlling users' liquidity.
The crypto staking industry has drawn criticism from certain regulators, who believe it camouflages the issuance of unauthorized securities. Kraken's staking service was halted by the U.S. Securities and Exchange Commission on February 9, leading to a penalty of $30 million due to alleged violations of securities laws. However, other stakeholders state their staking services do not qualify as securities. POSA member, Coinbase, defends that its service significantly differs from Kraken's and doesn't infringe securities laws.
Published At
11/9/2023 3:13:11 PM
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