- In September of 2022, the Ethereum network successfully completed its transition from a proof-of-work consensus mechanism to a proof-of-stake consensus mechanism. The move was done in an effort to bring greater efficiency and scalability to the network as its ecosystem of decentralized applications continues to grow and evolve.
“If you are an institutional investor and you have a long position on proof-of-stake crypto assets like Ethereum, then we can support you in the process of staking those assets long term, but done so in a way where we observe KYC/AML legislation, as well as the incoming Markets in Crypto Assets regulation in Europe,” Johansen said.
To do this, Northstake handles the infrastructure side of things, operating validation nodes on the networks they provide services for and serving as a virtual asset service provider under EU Law. The firm is also a regulated custodian. “So we do see a lot of institutional interest,” he said. “However, for the larger institutions, sovereign funds, endowments, and pension funds, it's still very hands-off. But investors in large family offices, hedge funds, crypto hedge funds, venture capital, crypto VC, and liquid funds have shown a great deal of interest.”
Outside of the Ethereum ecosystem, he said that the Near protocol and Solana have received a lot of interest.When asked how regulators are going to respond to staking services and whether they will carve out specific regulations that apply to staking, Johansen said that will depend on the jurisdiction.
“In the U.S., there is currently a gap in terms of crypto regulation,” he said. “The E.U. spent four years drafting MiCA. The U.S. now needs to play catch-up to close that gap, which will only increase as time progresses.” Based on these facts alone, Johansen suggested that the U.S. will be at least a couple of years behind Europe in establishing crypto regulations. “And with the current political climate and an upcoming presidential election, I think it's unlikely that you will be able to put meaningful crypto regulation forward within the next 12 months,” which will only extend the gap further.
“The majority of institutional capital coming in will be long, and therefore, will find its way into staking positions, and by that mechanism, support growing the broader crypto ecosystem,” he said. “Regulatory uncertainty is one of the main things holding back the realm of staking and not allowing it to progress forward.”
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Source: CryptoAmb - 🏆 22. / 68 Read more »