The digital tokens specified for liquid staking have seen a rally following the harsh actions taken by the United States Securities and Exchange Commission (SEC) against the crypto exchange Kraken.
The US securities regulator targeted the staking service provided by Kraken. Although this category is moving toward a total value locked of up to $15 billion, the organizations operating in Asia do not have any interest in it, as per the crypto custodian named Hex Trust.
Hex Trust Says Asian Entities Take No Interest in Liquid Staking
Liquid staking permits the consumers to keep their crypto assets’ liquidity while delegating the respective amount to the validators of the network.
This service is not decentralized. Nonetheless, it is based on protocol, making some people consider that this category would not be subjected to the same regulatory requirements which are implemented on the centralized staking services.
The organizational consumers have not been taking interest in crypto assets-based liquid staking. David Cicoria, Asia-centered Hex Trust’s Head of Markets Technology, stated that the only interest in these assets is witnessed when the public or consumers cannot access a specific token’s native staking.
The executive pointed out a few of the risks related to liquid staking including deficient regulatory clarity, centralization concerns, risks related to hacks, and de-pegging.
Protocols for liquid staking relate to decentralized finance (or DeFi). In this perspective, this service is not placed under the category of securities.
The regulatory perspective appears far to deal with them with enormous legal attention, as mentioned by Cicoria when he referred to the guidance provided by the Securities and Futures Commission (CFTC). The CFTC’s guidance asserted that these may comprise a mutual investment scheme.
The executive added that native staking is also called direct staking. According to him, this is known as a staking type that has seen interest from organizational investors.
On the other hand, Gary Gensler (the chairman of the SEC) has claimed that he has suspicions about the mediator-based staking entities. While speaking to the Wall Street Journal, he specified that it appears very analogous – with a few labeling changes – to lending.
The respective thing may have been the reason for the securities regulator to go after Kraken. Contrarily, it did not target Coinbase, which – according to the on-chain data – runs the bigger staking pool.
In the meantime, Hong Kong attempts to firm out the crypto policy thereof along with establishing a licensing regime to deal with the retail and organizational investors.
Hex Trust and GMO Trust Join Forces to Offer Licensed Custody Services
Last month, a collaboration was carried out among GMO Trust and Hex Trust for the provision of completely licensed as well as comprehensively secure custody services for the earliest Japanese yen stablecoin named GYEN.
As a part of the collaboration, the institutional-grade and compliant custodial services of Hex Trust would be integrated with top-level security.
This would let the consumers securely and matchlessly access the regulated ecosystem of the stablecoin. The Hext Trust is considered to be a well-known and comprehensively licensed platform in Asia that provides bank-grade custody as well as other services connected to digital assets.
The company is run by professional banking technologists as well as award-winning experts in the financial sector. Hex Safe, an entity for proprietary bank-grade services and products, has been built by the Hex Trust. These services take into account solutions related to financing, brokerage, DeFi, and custody.
