> The SEC’s characterization of Kraken’s staking setup highlighted the “risks” investors take on when staking their tokens with “staking-as-a-service” providers, which give them “very little protection,” a press release said.

Right. The SEC has apparently had it with uninsured, unregulated exchanges. After FTX, tolerance for that sort of thing is over. They want to stop this before somebody dips into customer funds, instead of after.

Kraken claims to be "regulated by FinCen."[1] This is deceptive. FinCen, the Financial Crimes Enforcement Network, is not a regulator of organizations which hold the assets of others. It's the anti-money-laundering coordination center, the "know your customer" part of enforcement. Anybody can file the form to be listed with FinCen; that just says you might need to report transactions in future and want a login. It's nothing like getting a banking or brokerage or exchange license, where auditors check up on what you're doing with the customers' money.

[1] https://support.kraken.com/hc/en-us/articles/360031282351-Is...