Charles Hoskinson, the inventor of Cardano (ADA), has offered a concept that might comply with legal requirements as the crypto market adjusts to heightened regulatory scrutiny around staking operations.
During a February 10 webinar, Hoskinson suggested that operators in the industry pursue the contingent staking model centred on know-your-customer standards.
Hoskinson highlighted that under the concept, the transaction certificate would be double-sided, requiring both the delegate and the staking pool operator to sign the transaction before it is completed. Notably, when an individual wishes to delegate their stake to a pool under the present staking mechanism, they submit a transaction to the pool.
In contrast, the method for dependent staking differs in that the transaction remains pending until both the delegate and the pool operators have signed it. In this line, pool operators would have the chance to agree to the delegation prior to its occurrence.
“It is an intriguing topic if staking models should be modified to reflect regulatory peculiarities. <…> You may introduce the notion of dependent betting, which is essentially two-sided. <…> This transforms a push-based, non-consensual relationship into a bilateral, consensual one,” he said.
In addition, Hoskinson thinks that contingent staking would allow pool operators to pick who they delegate to, which might assist them in meeting regulatory obligations.
During the webcast, Hoskinson alluded to the Cardano community’s intention to draught the required documentation to establish the notion. The papers would detail how contingent staking would function in reality and serve as a work product for the Cardano community.
The Securities and Exchange Commission (SEC) struck a settlement with cryptocurrency exchange Kraken over the platform’s staking practices, prompting his remarks. As part of the agreement, Kraken will cease its staking services in the United States.
Indeed, the crypto community has criticized the SEC’s most recent rule, accusing the agency of aiming to impede the sector’s development. However, SEC chairman Gary Gensler has criticized this premise, citing the agency’s mandate to safeguard investors.
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