Shapella Upgrade Affecting Ethereum Staking Deposits

Data from on-chain analytics provider Glassnode showed a slight decline in the volume of Ethereum (ETH) staking deposits in the last few weeks.

This drop in staking activities was attributed to a combination of an increase in regulatory pressure and the upcoming Shapella upgrade. Notably, both the Shanghai and Capella upgrades are collectively referred to as the Shapella upgrade.

The Glassnode report indicates that ETH deposits on the Beacon Chain plummeted from 6.9 million to about 6.7 million. Although slight, the dip is also significant due to the importance of Ether staking to the complete transition to a proof-of-stake (PoS) consensus mechanism also known as The Merge. Investors have expressed feelings of disappointment following the plunge in the market.

Since the implosion of FTX, the crackdown on cryptocurrency has intensified and in the few months of this year, financial regulators have had it all out for the nascent industry.

United States regulator, the Securities and Exchange Commission (SEC) is still bent on referring to ETH as securities even after Vitalik Buterin, the founder of Ethereum has expressly clarified that it is not. This contributed to a crackdown on ether staking.

Gary Gensler, the chairman of the SEC said;

“Everything other than Bitcoin, you can find a website, you can find a group of entrepreneurs, they might set up their legal entities in a tax haven offshore, they might have a foundation, they might lawyer it up to try to arbitrage and make it hard jurisdictionally or so forth,” but “at the core, these tokens are securities because there’s a group in the middle, and the public is anticipating profits based on that group.”

Shanghai Upgrade to Launch Soon

The Shanghai hard fork was initially scheduled for February with the main implementation to take place by March. One aim of the hard fork is to give users easy access to staked currencies and locked ether. TheCoinRise called the Shanghai hard fork “the next big project for the Ethereum development team since after the merge.”

However, the test launch was later postponed to April 12th, a few weeks after the Goerli testnet launch slated for March 14.