The Securities and Exchange Commission’s (SEC) shutdown of crypto exchange Kraken’s U.S. staking-as-a-service business may certainly lead to a wider industry crackdown. However, “this is not a condemnation of staking writ large,” said Zachary Fallon, a former special adviser to the regulator’s general counsel and previously senior special counsel to the director of the SEC's Division of Corporate Finance.

Rather, “this is a condemnation of Kraken’s staking program specifically,” Fallon said.

He said the SEC’s move is an “obvious shot across the bow to others” that offer staking services to retail users in the U.S. However, he said, the circumstances might have been different had Kraken’s staking program been “merely a technological connective tissue to underlying protocol.”

Instead, “what Kraken appears to have done is essentially run a program on top of what the underlying protocol itself spits out,” he said.