Ether losses mount as crypto investors weigh staking future

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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 3% on Friday to $1,526.95, according to Coin Metrics, after losing 5% the previous day. At some point during the day, it fell to its lowest level since January 25.

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Bitcoin’s loss was smaller. It fell 1% to $21,693.64 and also traded near its lowest level since late January.

Ether and bitcoin both ended down for the week, down 8% and 7%, respectively.

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Ether Falls Amid Latest Crypto Regulatory Scare

The decline began after crypto exchange Kraken shut down its staking program as part of a $30 million settlement with the Securities and Exchange Commission. Earlier in the week, Coinbase CEO Brian Armstrong sounded the alarm about a potential 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 proof-of-work cryptos, such as bitcoin and litecoin, shouldn’t be as severe as the effects on ongoing proof-of-stake cryptos before,” said YuyaHasegawa, 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.

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