Cardano
Charles Hoskinson: This is how Cardano could fix staking in the US to be compliant with SEC
- Cardano founder Charles Hoskinson has proposed the contingent staking model for the ecosystem.
- The staking model will help meet regulatory requirements and also help boost the ecosystem.
Cardano blockchain network founder, Charles Hoskinson has waded into the ongoing controversy concerning the survival of staking services in the United States. Hoskinson’s comments come at a time when the US Securities and Exchange Commission (SEC) fined the Kraken trading platform $30 million for offering staking-related services.
Staking is a blockchain venture through which users with a certain amount of a Proof-of-Stake (PoS) digital currency lock them up in a smart contract to support validation activities on the network. For their locked assets, they generally earn a defined reward which is often paid out in that same token.
The SEC under Chairman Gary Gensler has posited that this staking activity is a form of security offering and that trading platforms that offer such should be on their toes. As a PoS network, many platforms and exchanges offer staking services for Cardano and Hoskinson is proposing a way to get ahead of regulators.
Charles Hoskinson and his contingent staking proposal
The proposal Charles Hoskinson postulated was termed “Contingent Staking.” As one of the most versatile innovators in the space, Hoskinson said the staking model will allow staking pool operators (SPOs) to choose which users are allowed in the pool to comply with U.S. regulatory laws.
The idea behind the contingent staking initiative is derived from Proof-of-Work (PoW) consensus mechanism. In this model, there is a mutual agreement between the pool operators and the investors interested in participating in the staking venture.
This model according to Charles Hoskinson will not only be beneficial for regulatory purposes but also to “improve the distinction and work system in the staking programs.”
The SEC posits that the staking platforms’ model involves users depositing the coins and earning a reward based on the work of others. The regulator says this is in consonance with the Howey Test that depicts what asset is security and which is not.
In the model proposed by Hoskinson, the staking program will shift from being unilateral and non-consensual to a consensual one as an agreement to move forward will have to be arrived at by the duo. While the Contingent staking modalities are projected for the Cardano blockchain, Hoskinson believes it could change the narrative for all other staking pools and service providers in the Web3.0 world.
Cardano has already been hinted at as one of the most decentralized protocols around and this is also embodied in its staking services at the moment.
Crypto market reaction to the SEC onslaught
Since the news of the SEC crackdown on Kraken Exchange surfaced, the broader crypto ecosystem recorded a significant plunge in pricing and valuation across the board. Bitcoin (BTC) is currently changing hands at $21,711.23, down by 0.86% over the past 24 hours according to data from MarketsCap.
Ethereum (ETH), Solana (SOL) and XRP are all down as well, showing an encompassing slump for the most dominant digital currencies.
