The alternative is a bank account. That's not a conversation anyone in crypto wants to have.
Longer: yes, it does. You're investing money with the expectation of profit. For on-chain staking, the common enterprise and effort of others tests are ambiguous. But here, you're not staking on chain. You're giving money to Kraken to stake for you. Security. (Again, it looks more like a savings account, but nobody wants that.)
It seems to me that by this description, whether or not it's a security is basically how it's marketed?
You could also explain such a product as simply a custodianship that is able to hold your eth in a staked state for you, with no promise of return at all, only a claim to whatever the staked eth amounts to in its own domination at the time you'd like to withdraw.
Also these returns are denominated in the staked currency, there is no - and had never been - a promise of returns in USD. I don't actually know: does that make a difference, technically speaking? It would seem that it should.
> whether or not it's a security of basically marketing?
Not basically, but substantially.
> could also explain such a product as simply a custodianship that is able to hold your eth in a staked state for you, with no promise of return at all, only a claim to whatever the staked eth amounts to in its own domination at the time you'd like to withdraw
Custodianship is a big word in finance [1]. There are crypto custodians, and I'm guessing they let coins be staked. But that isn't something you can easily scale to retail.
> there is no - and had never been - a promise of returns in USD
Not relevant. You can issue stock that pays dividends in piñatas. If it's sold to Americans, the SEC has jurisdiction.
> Isn't this because the stock itself is already a security, not because of whether or how it pays dividends?
Whether it pays dividends, at all or in what form, is irrelevant to whether it's a security. That Kraken didn't pay out U.S. dollars isn't relevant to the question of whether they were offering securities.
Yeah that makes sense but that's not what I was meaning to point out. You said this:
> You can issue stock that pays dividends in piñatas. If it's sold to Americans, the SEC has jurisdiction.
So whether or not the stock issues dividends in eth, USD, pinatas, or not at all, doesn't matter. The SEC "has jurisdiction" simply because a stock is already a security to begin with, right?
What I'm asking is, if dividends are not relevant, how is the SEC able to step in specifically in regards to dividends in this case?
The way you phrased it, I would understand it to mean that if you can hold the token (or stock, equity, security, etc) on behalf of a user to begin with, then you'd be able to issue the dividends without further approval. Is that understanding incorrect?
> if you can hold the token (or stock, equity, security, etc) on behalf of a user to begin with, then you'd be able to issue the dividends without further approval
Staking returns are more similar to stock lending than dividends. They don’t automatically arise from owning a token.
