New US regulatory steering permitting banks to develop into validators for blockchain networks is a serious step for institutional adoption however worsens centralization dangers, Bohdan Opryshko, chief working officer of staking service supplier Everstake, advised Cointelegraph.
On March 7, the US Workplace of the Comptroller of the Forex (OCC) eased its stance on how banks can engage with crypto, together with allowing banks to take part “in unbiased node verification networks,” the regulator said.
Opryshko mentioned US banks’ elevated involvement in proof-of-stake (PoS) networks, similar to Ethereum and Solana, may very well be a “double-edged sword.”
“If banks develop into dominant validators, energy might develop into concentrated, decreasing the decentralized nature of PoS networks,” Opryshko advised Cointelegraph on March 12.
The extra monetary inflows into PoS networks might additionally suppress staking yields, probably undermining smaller validators, he added.
“If main institutional gamers, similar to banks, enter the staking market and instantly stake giant quantities, […] it might trigger a pointy discount in staking rewards for all different contributors,” Opryshko mentioned.
Staking yields as of March 12. Supply: Staking Rewards
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As of March 12, Ether stakers earn roughly 5.5% APR, and Solana stakers earn shut to eight%, according to knowledge from Staking Rewards.
Staking entails securing blockchains by posting crypto as collateral with validators in change for rewards.
Debanking debacle
The OCC’s announcement got here after US President Donald Trump vowed to finish a protracted regulatory crackdown that restricted crypto companies’ entry to banking companies.
Crypto trade outrage over so-called “debanking” reached a crescendo when a June 2024 lawsuit spearheaded by Coinbase resulted within the launch of letters exhibiting US banking regulators requested sure monetary establishments to “pause” crypto banking actions.
In a Jan. 23 govt order, Trump — who has vowed to make America the “world’s crypto capital” — advised companies to prioritize “honest and open entry to banking companies” for digital asset companies.
As of March 12, Anchorage Digital is the one federally chartered US financial institution to supply cryptocurrency staking.
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