XRP Ledger-based Crypto-to-Fiat Solution Halts Reward Programs Citing SEC Crackdown

XRPayNet chooses to err on the side of caution in the face of recent SEC enforcement action.

XRPayNet, a crypto-to-fiat payment solution built on the XRP Ledger, has disclosed a decision to halt its staking program.

The project announced this in a Twitter thread today, citing the United States Securities and Exchange Commission’s enforcement action against Kraken. According to XRPayNet, the decision is temporary till it gets more clarity and will affect all coins it provides staking services for, including the XRPayNet coin.

Important Update: We've temporarily halted all reward programs on the XRPayNet app due to recent events involving Kraken vs the SEC. This includes staking rewards for the XRPayNet coin and all other coins or tokens.

— XRPayNet (@XRPayNet) February 9, 2023

Recall that yesterday, Kraken reached a settlement agreement with the SEC as it charged the crypto exchange with selling unregistered securities via its staking-as-a-service program to U.S. customers. The SEC alleged that the program, which offered customers up to 20% yield for locking their crypto assets, constituted an investment contract as users expected profits from the efforts of the crypto exchange. Additionally, the regulator asserted that Kraken failed to give sufficient disclosure on how it guaranteed what it believed to be unrealistic rewards.

Kraken settled the case, agreeing to pay $30 million to the regulator and discontinuing its staking program for U.S. customers.

The SEC asserted in its press release that it expects all platforms offering staking services to retail investors in the U.S. to register and provide full disclosure.

For context, XRPayNet is a crypto-to-fiat service that allows users to make payments in crypto while automatically converting the crypto payment to the desired fiat currency of the receiver. It grabbed headlines last November after it entered a partnership with three firms in the United Arab Emirates to build a retail payment system to service hundreds of stores in the region.

The project started offering staking services for the XRPaynet coin and Sologenic within its app last October. Notably, users had to lock up their assets for at least three months with no withdrawals to earn rewards. Most recently, it partnered with the XRPL’s first healthcare marketplace, XRPHealthcare, to offer the same service for XRPH.