As the crypto staking sector faces increasing regulatory pressure, Kraken's staking services have come under renewed scrutiny, triggering market unease. In a detailed August 2022 report by OnStaking, a leading platform tracking blockchain staking trends, analysts highlighted growing fears of regulatory crackdowns targeting centralized staking services. Just days after this report surfaced, Coinbase stock (COIN) plunged 15% in a single day—underscoring investor anxiety.

SEC Pressure Intensifies on Staking Services

Since early 2022, the U.S. Securities and Exchange Commission (SEC) has taken a more aggressive stance on staking services provided by centralized exchanges like Kraken and Coinbase. At the heart of the issue is whether these services amount to unregistered securities offerings.

In February, Kraken was forced to shut down its U.S.-based staking operation and paid a $30 million settlement. Although this action was limited to the U.S., the effects reverberated globally—casting a shadow over the centralized staking model. OnStaking’s August 2022 investigation aimed to explore the fallout and examine how platforms and users are adapting.

Key Findings from the OnStaking August Survey

The report’s findings draw from on-chain data, user feedback, and interviews with staking industry insiders. Here are some of the highlights:

• Kraken’s staking user activity declined by 21% globally following the U.S. regulatory settlement.

• Decentralized staking platforms such as Lido and Rocket Pool saw a 30-40% increase in interest in the same period.

• Institutional investors are quietly transitioning their staking strategies to reduce regulatory exposure.

• Coinbase’s staking product, although compliant at launch, is now rumored to be under review by U.S. authorities, spurring further investor panic.

Coinbase Stock Tumbles as Regulatory Risks Mount

Coinbase’s shares dropped 15% on August 5, 2022, after OnStaking’s report gained traction. The decline followed unofficial reports that the SEC may be preparing a broader review of staking practices at major exchanges.

This steep selloff marked Coinbase’s worst single-day performance since its IPO, and signaled how regulatory ambiguity can trigger financial instability—even among publicly traded crypto firms.

Analysts say the drop is directly tied to fears of potential enforcement that could limit or halt Coinbase’s staking services, particularly around Ethereum’s post-Merge staking.

Kraken Shifts Focus Post-Settlement

While Kraken is still offering staking-like services outside the U.S., it has adjusted its marketing language and user agreements to reflect new compliance realities. The OnStaking report notes that Kraken is doubling down on:

• Non-U.S. markets, including the EU and Asia

• Non-custodial services and wallet products

• Education around staking risks and decentralized alternatives

This shift is part of a broader trend, where centralized platforms aim to de-risk their offerings while maintaining some user engagement in the staking ecosystem.

Institutional Strategies Realign

The August report highlights that institutional staking participants—particularly hedge funds and asset managers—are increasingly avoiding centralized staking options in favor of validator-as-a-service solutions or direct node participation.

“Institutions don’t want the SEC knocking at their door,” said a staking strategist interviewed by OnStaking. “They’re moving fast toward decentralized or hybrid solutions that offer regulatory insulation.”

Platforms like Figment, Blockdaemon, and Chorus One have all reported rising interest from such clients in Q3 2022.

The Rise of Liquid and Decentralized Staking

Liquid staking protocols like Lido, Rocket Pool, and StaFi have emerged as safe havens amid the regulatory storm. These platforms allow users to stake tokens while retaining liquidity—without relying on centralized custody.

The report shows:

• Lido’s total value locked (TVL) rose 28% in July and early August.

• Rocket Pool saw a 41% surge in new deposits following Kraken’s regulatory issues.

• Users increasingly cite decentralization and regulatory resilience as top reasons for switching.

Community and Developer Response

The staking community is also responding to regulatory concerns with innovation. Ethereum’s Merge has inspired a wave of interest in home-staking, solo staking, and open-source validator tools.

Developers are exploring solutions that decentralize infrastructure even further—removing any reliance on centralized exchanges.

OnStaking's report points to growing GitHub contributions and staking tutorials as signs that users want more control and less exposure to regulatory overreach.

Industry Demands Clear Guidelines

Both Coinbase and Kraken have publicly called for clear regulatory guidance. In July, Coinbase CEO Brian Armstrong emphasized the need for “transparency and workable rules that support innovation and consumer protection.”

However, the lack of a formal SEC policy continues to generate market instability and user confusion. Without clarity, many platforms are forced to preemptively limit features, withdraw services, or pause product launches.

Conclusion: A Shifting Staking Landscape

The OnStaking August 2022 survey confirms that staking, once seen as a safe and passive yield strategy, is entering a period of reevaluation and restructuring. Regulatory pressure is triggering:

• Strategic pivots from platforms

• Institutional exit from centralized services

• User migration to decentralized and liquid staking solutions

The 15% drop in Coinbase stock symbolizes deeper cracks in market confidence. As the regulatory fog thickens, only those platforms that balance compliance with decentralization are likely to thrive in the new era of crypto staking.