SEBA Launches Ethereum Staking Service For Institutional Clients

Switzerland-based digital banking platform SEBA Bank has announced the launch of an Ethereum staking service designed for institutional clients ahead of the “Merge”.

The Ethereum staking service was borne out of demand from investors to manage a variety of digital assets. It already offers the same service for Cardano, Polkadot, and Tezos. Ethereum’s transition from the proof of work mechanism to the proof of stake mechanism is currently one of the most anticipated developments in the cryptosphere. 

The merge will allow the network to significantly cut energy consumption by over 99% and improve its scalability and security. This transition is scheduled for September 15.

Once completed, the merge will see validators who stake ether for rewards replace miners in securing the network. According to Mathias Schutz, institutional clients can also contribute to the security of the Ethereum network by staking ETH. 

The new offering also allows the firm to stay in tune with the rapidly developing digital space while users generate rewards on their ether holdings on a monthly basis.

Institutional staking raises concerns for centralization

Institutional entry into the ETH staking subsector is a “win-win” for both the ecosystem and the institutions.

SEBA joins the likes of Anchorage Digital who already offer to stake services on its platform in preparation for Ethereum’s Merge. The crypto bank launched its staking service for institutional clients in June.

In the proof-of-stake mechanisms, investors with larger stakes hold more voting power and to a large extent can determine the state of the ledger.

As per a Dune Analytics report, 66% of ETH staked on the beacon chain is held by entities that are regulated by the US Office of Foreign Assets Control (OFAC).

Coinbase which holds 15% of staked ETH is one of such entities.

Should these entities be influenced by an external force like the OFAC, they can censor transactions on the blockchain.

In response to concerns about the centralization of staked ETH after the merger, Brian Armstrong, CEO of Coin base says he would rather shutdown the service rather than honor requests to censor the blockchain if asked by the regulators.