By Philip Maina
1 hour agoSun Nov 12 2023 10:38:08
Reading Time: 2 minutes
Blockchain staking firms have updated their governing rules to protect users
The new rules now require staking firms like Lido and Coinbase to clearly convey information to new and existing users
The alliance also wants to use the new rules to boost innovations in the staking world
Blockchain staking firms under the Proof of Stake Alliance (POSA) have reviewed their operating guidelines to protect users and boost innovations in the stalking field. The new rules now require staking platforms to provide clear information about their services and fees to allow users to make informed decisions. Among the firms that signed the new rules are Lido and Coinbase, a sign that entities offering blockchain-based products are ready to self-govern to avoid attracting intervention from conventional regulators.
No Guarantees on Rewards
According to the alliance, platforms offering staking as a service need to adequately inform their users on whether they’re providing “ self-custodial software-as-a-service staking, delegated staking or smart contract-facilitated liquid staking.”
POSA added that its members should “refrain” from promoting a certain digital asset or excessively advertising the benefits users would gain from staking. POSA also discouraged staking firms from offering “investment advice.”
The updated rules also prevent staking service providers from promising extra rewards outside what a platform offers, adding that a platform shouldn’t have hidden charges.
Other rules include allowing users to explicitly choose the type of staking they need, the staked amount and ensuring that users maintain ownership of staked assets. The alliance also discouraged staking platforms from “providing guarantees on the amount of rewards earned.”
Appeasing Regulators
The alliance noted that the new rules are due to “the current regulatory climate in the United States.” The United States’ securities watchdog, for example, has in the past said that it’s considering banning retail staking. The country’s taxman has also indicated that staking income should be taxed.
With POSA updating its principles, it’s to be seen whether regulators will allow blockchain-focused platforms to self-govern themselves.
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