Ether leads Bitcoin in losses after Kraken settlement

Staking, in which users lock tokens and generate income to enable a blockchain to operate, is the backbone of a growing number of large crypto projects. The most widely used blockchain for staking is Ethereum, whose ether cryptocurrency fell more than 6% on Friday to around $1,500 — the lowest since Jan. 19, according to CoinMarketCap.

After weeks of bullishness, Bitcoin, which accounts for 41% of the total crypto market cap, also fell 4% to around $21,600 on Friday. It was the first time the cryptocurrency had fallen below $22,000 since late January.

The settlement has raised concerns about whether the SEC and Chairman Gary Gensler will proceed with further enforcement actions against the crypto sector. The chairman previously said most cryptocurrencies are securities, and told Yahoo Finance in December that “the runway is getting shorter” for crypto companies to voluntarily register with the SEC.

Meanwhile, Coinbase’s chief legal officer, Paul Grewal, told Bloomberg that Kraken’s settlement would not hurt the crypto exchange, which also offers a staking product. Nevertheless, in a tweet on Thursday, he called for more clarity and clear rules from the supervisory authorities.

“Our customers’ rewards are tied to reality,” he wrote in the tweet. “They depend on the rewards paid by the protocol and the commissions we disclose. We don’t play games.”

However, partly due to the possibility of further enforcement action against the sector, the company’s stock also took a hit.

Coinbase stock fell about 3% on Friday to trade at $57.77. The decline is the latest pullback for the company’s share price, which has plunged 70% over the past year, in part due to a difficult macro environment and the overall decline in crypto prices.

Total crypto market cap fell 4.3% on Friday as it nearly fell out of the ranks of the trillion-dollar asset classes after only regaining status in late January following the fallout from FTX’s bankruptcy.