Crypto Harmonics: Orchestrating Responsible Staking Practices

On a crisp November 9th, the Proof of Stake Alliance (POSA), an altruistic beacon in the dynamic realm of crypto staking, unveiled an enhanced rendition of its "staking principles." This symphony of guidance orchestrates the participation of 15 diverse entities, including but not limited to Alluvial, Ava Labs, Blockdaemon, Coinbase, Credibly Neutral, Figment, Infstones, Kiln, Lido Protocol, Luganodes, Methodic, Obol, Polychain, Paradigm, and Staking Rewards, echoing the collaborative spirit within the staking industry.

Previous version of the POSA staking principles. Source: POSA

Originally birthed in the intellectual crucible of 2020, these principles, akin to an industry manifesto, admonish staking providers against the siren call of offering investment counsel, making lofty promises about staking rewards, or insinuating dominion over a protocol in their promotional materials. Rather, the counsel implores these providers to extol the virtues of granting access to protocols and fortifying user security. A linguistic ballet is also encouraged, preferring the non-financial ballet of "staking rewards" over the fiscal waltz of "interest" in marketing parlance.

In the latest sonnet unveiled on November 9th, three additional stanzas join the poetic discourse. First and foremost, staking providers are urged to be the maestros of "clear communication," serenading users with the sweet melodies of information to ensure their decisions are harmoniously informed. Secondly, users are invited to dance with autonomy, choosing the tempo of their assets to be staked, thus fostering a symphony of "user ownership of staked assets." The final movement crescendos with a call for staking providers to bear the torch of "explicitly delineated responsibilities," abstaining from the intoxicating allure of managing or controlling liquidity for users.

Yet, amidst this sonorous landscape, the crypto staking industry finds itself navigating the treacherous waters of regulatory scrutiny. Some critics cast shadows, alleging that it conceals the issuance of unregistered securities. In the dramatic narrative, the United States Securities and Exchange Commission (SEC) shuttered Kraken's staking service on February 9th, casting a $30 million toll for perceived securities law transgressions. Yet, in this intricate ballet of legality, other staking providers, like the illustrious POSA member Coinbase, pirouette defiantly, asserting the fundamental distinctiveness of their services and disavowing any dalliance with securities laws. Thus, the saga of regulatory intricacies continues, an ever-evolving performance in the grand theater of crypto staking.

You might also like: BlackRock's Crypto Symphony: Navigating the ETF Waters