Kraken Permits Withdrawal Of All Staked ETH When Shapella Big Upgrade Done

Key Points:

• With the Shapella upgrade, Kraken began removing all staked Ethereum related to its US customers.
• Although validators may stop staking Ethereum, their 32 ETH staked and consensus layer incentives will stay on the network.
• Because of SEC regulatory pressure on staking services, Kraken and Coinbase are expected to withdraw staked ETH after the Shapella update.

During the Shapella upgrade slated for today, April 12, crypto exchange Kraken has begun the process of removing all staked Ethereum linked with its customers in the United States.

Since the Shapella update will allow Ethereum staked on the Beacon Chain to be transferred to the execution layer, Kraken is removing all staked ETH related to its US retail clients.

On April 12, Ethereum advocates Anthony Sassano tweeted that Kraken is unstaking ETH by quitting its validators.

For clarity:

Validators are currently able to exit but the associated 32 ETH stake and consensus layer rewards are not able to be withdrawn (aka moved around) until Shapella goes live in around 12 hours

What Kraken is doing right now is exiting their validators

— sassal.eth (@sassal0x) April 12, 2023

Although validators may stop staking Ethereum, their 32 ETH staked and consensus layer rewards will stay on the network until the Shapella upgrade is complete.

Because of SEC regulatory pressure on staking services, Kraken and Coinbase are expected to withdraw staked ETH after the Shapella upgrade. Coinbase and Kraken have 2.29 million and 1.25 million ETH invested in their systems, respectively. That will put further selling pressure on Ethereum.

According to Glassnode, only 170,000 Ether of the total 18.1 million ETH invested on the Beacon Chain will be freed within the first week of the Shanghai hard fork being conducted on Ethereum.

The amount includes 100,000 Ether in staking incentives and 70,000 Ether staked, as projected by the on-chain intelligence platform in its April 11 report.

Glassnode supported its projection by saying that just 253 depositors are waiting to sell their shares and that a few procedures are in place to prevent a torrent of Ether supply from entering the market all at once.

The SEC accused Kraken in February of operating an unlicensed crypto asset staking-as-a-service business to its US consumers. Except for staked ETH, Kraken instantly ceased crypto staking.

DISCLAIMER: The information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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Harold

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