Kraken will end its crypto staking program in the US and pay $30 million in penalties as part of a settlement with the Securities and Exchange Commission. The regulator charged the company with selling unregistered securities through its “crypto asset staking-as-a-service program.” It’s been clear for a while now that the SEC was planning to clamp down on crypto yield programs. In 2021, it got into a spat with Coinbase over the exchange’s plans to launch a lending feature in the US, and last year, it (and several states) settled with BlockFi for $100 million over the company’s interest accounts.

Coinbase CEO Brian Armstrong tweeted concern about “rumors” the SEC would like to get rid of crypto staking in the US, claiming it’s “important innovation” and “not a security” — important since labeling it that way makes these businesses and, potentially, proof-of-stake blockchain operations like Ethereum 2.0 — subject to much stricter laws.

SEC Chair Gary Gensler appears to disagree, which could be bad news for others offering staking to customers in the US. This agreement should “make clear to the marketplace that staking-as-a-service providers must register and provide full, fair, and truthful disclosure and investor protection,” Gensler said in a press release.

When news of the settlement broke via a report on CoinDesk at 2:30PM ET, the price of Ethereum dropped sharply, falling over 4 percent in 30 minutes.

According to the SEC, Kraken took investors’ crypto and put it into a staking pool with the hopes of earning rewards. (Those rewards are meted out for being part of the validation process used by some blockchains.) In return for having their crypto locked up, Kraken’s customers would, in theory, earn interest on that crypto. But the regulator says that the returns Kraken promised were “untethered to any economic realities” and that the exchange provided “zero insight into, among other things, its financial condition and whether it even had the means of paying the marketed returns in the first place.”

The SEC also takes issue with the lack of consumer protections available for Kraken’s staking service, saying that the exchange “retained the right to pay them no returns at all.”

In a statement posted on its blog, Kraken says it’ll continue offering its staking services outside the US. It also says that its clients in the US will automatically have their non-Ethereum crypto unstaked, and their Ethereum stakes will be removed as soon as possible.

The regulator says that this settlement should “make clear to the marketplace that staking-as-a-service providers must register and provide full, fair, and truthful disclosure and investor protection.” The action comes after a year of seeing major crypto firms — including ones involved in interest programs — going bankrupt.