Liquid staking tokens rose after the U.S. Securities and Exchange Commission (SEC) targeted the Kraken staking service and set its sights on the technology. However, according to cryptocurrency custodian Hex Trust, even though the category is headed for the $15 billion mark, Asia’s Institutional investors have shown no interest in this category, he said.
Liquid staking allows users to retain the liquidity of their crypto assets while entrusting them to validators on the network. Liquid staking is not decentralized, but because it is protocol-based, some believe it will not be subject to the same regulatory scrutiny as centralized staking services.
“Institutional investors are not very interested in liquid staking. We are only interested if clients or the general public do not have access to native staking of a particular token,” said the Asia-specific. David Cicoria, head of market technology at Hex Trust, said.
Cikoria points to several risks associated with liquid staking, including depegging, hacking risks, centralization concerns, and lack of regulatory clarity.
“Liquid staking protocols belong to decentralized finance (DeFi), are not considered ‘securities’ from a protocol or asset perspective, and are far from being subject to serious legal attention in terms of regulation.” , pointed out that it may fall under the “collective investment scheme” indicated by the Securities and Futures Commission.
Native staking, also known as direct staking, is gaining interest from institutional investors, according to Cikoria. But only if there is actually technical staking going on, he said.
SEC Chairman Gary Gensler said he has doubts about brokered staking platforms, telling the Wall Street Journal that “if you change a few labels, it’s going to be very similar to lending.” There are.” That may be why the SEC has turned to Kraken instead of Coinbase, which operates a larger staking pool with on-chain data.
Meanwhile, Hong Kong is trying to solidify its crypto policy and build a licensing regime for institutional and individual investors.
｜Translation: coindesk JAPAN
｜Editing: Toshihiko Inoue
｜Original: Institutions in Asia Aren’t Interested in Liquid Staking: Hex Trust