The Institutional Credibility of Crypto Staking

In February 2023, Payward Ventures and Payward Trading – crypto-asset entities operating under the more familiar Kraken brand – paid $30 million in settling Securities and Exchange Commission charges that it failed to register a “staking-as-a-service program” that advertised annual investment returns of up to 21%.

Whether through a staking service, lending or other means, crypto intermediaries “need to provide the proper disclosures and safeguards required by our securities laws,” then-SEC Chair Gary Gensler reprimanded.

Three years later, staking may still seem arcane outside of crypto world. But as digital assets have grown and gone mainstream, increasingly fueled by institutional investing, staking is being recognized as a legitimate contributor to an otherwise often volatile value proposition.

It is a “very, very simple” model, Joseph Chalom, a longtime BlackRock executive who is now CEO of SharpLink, explained to TheStreet last October. Participating in the Ethereum proof-of-stake blockchain, the company collects rewards from its holdings of ether. “You get yield back, which is called staking yield,” Chalom said, then at...