Cardano CEO Suggest Contingency Staking Model Amidst Kraken Crackdown

Cardano (ADA) founder Charles Hoskinson has proposed a regulatory model for staking which he believes is aligned with legal requirements.

The Cardano boss suggested that operators in the crypto industry adopt the contingency staking model which leverages the Know-Your-Customer (KYC) procedures. Hoskinson’s suggestion comes at a time when there is a heightened interest in staking and its regulation.

This contingency staking model entails that the transaction is approved by both the delegates and the staking pool operator.

Specifically, the delegate will be expected to sign a part of the transaction while the pool operator endorses his part before the transaction is fully approved and moves on to be processed. This is unlike the current staking models which only entail that the delegate sends his transaction to the pool.

For a change, the pool operators now also play a significant part in the staking transactions like the delegates. No transaction without the consent of the pool operator will be processed; rather, it will remain pending until all necessary modalities are taken care of. More so, pool operators are presented with the option of choosing which delegate they want in their staking pool.

“It is an interesting question about starting to change staking models to accommodate regulatory nuances. <…> You can introduce a concept of contingent staking, and basically, it’s two-sided. <…> This changes a push non-consensual relationship to a bilateral consensual relationship,” the Cardano chief explained.

This, in itself, will help to ensure that regulations surrounding staking are strictly adhered to by the delegates. Based on a statement by Hoskinson, the Cardano community is mulling plans to kick-start the drafting process of the document which would usher in the concept. Invariably, the document will describe how the contingency staking model will work.

Kraken Shuts Down Staking Operation in the U.S

Just like the United States Securities and Exchange Commission (SEC) had earlier pointed out, Hoskinson agrees that Ethereum (ETH) staking protocol resembles regulated products. At the same time, cryptocurrency exchange Kraken has just settled charges with the SEC and also ended its U.S. crypto staking-as-a-service program which was allegedly offering unregistered securities products to U.S. residents.

Kraken is paying $30 million as part of its settlement with the U.S. SEC as well as halting staking in the United States market. This will be the second market that Kraken is leaving in part or whole in a short while. In December, the crypto exchange made up its mind to exit the Japanese market. 

Meanwhile, Revolut launched staking services for tokens including Ethereum (ETH), Cardano (ADA), Polkadot (DOT), and Tezos (XTZ).