- The US Securities and Exchange Commission has launched another scanty attack on crypto exchange Kraken forcing them to halt their staking program and pay a $30 million fine.
- In response, the Washington DC-based Blockchain Association of over 100 crypto companies has issued a statement that the SEC’s action is part of the ongoing attack on the industry.
The US Securities and Exchange Commission (SEC) has an ongoing lawsuit against Ripple Labs for issuing unregistered securities. Many believe that a victory for the SEC could spell doom for the entire crypto sector. Interestingly, the agency has launched another attack on crypto exchange Kraken forcing them to halt their staking program and pay a $30 million fine. According to the SEC, Kraken failed to go through the needed registration of their staking-as-a-service program, Kraken staking. The program allowed users to take part in the validation process by locking up their assets in return for a reward.
In response, the Washington DC-based Blockchain Association of over 100 crypto companies has issued a statement that the SEC’s action is part of the ongoing attack on the industry. Led by the CEO Kristin Smith, the Association has stated that the decision against the sector affects the potential of public blockchain networks in the country.
The SEC continues its attack on US crypto companies and retail investors, regulating by enforcement and undercutting the potential of public blockchain networks in the United States.
Staking is an important part of the crypto ecosystem, allowing individuals to participate in decentralized networks and giving investors more options to earn passive income.
SEC Commissioner criticizes the agency
The Blockchain Association has long been pushing for the improvement of public policy for blockchain networks. The action of the SEC has forced some crypto companies to move offshore, something the Association wants lawmakers in Congress to prevent.
Today’s settlement isn’t law but is another example of why we need Congress – not regulators – to determine appropriate legislation for this new technology. Otherwise, the U.S. risks driving innovation offshore and taking online freedoms away from individual users.
SEC Commissioner Hester Peirce has also criticized the Agency, stating that the decision to regulate the industry with enforcement is bad for the average American investor. According to Peirce, the decision to launch a legal action and force settlement is lazy and paternalistic. The perfect step is to offer guidelines to the industry.
While admitting that transparency around the crypto staking program would certainly be a good thing, it is important to consider a uniform regulatory solution. However, if this solution comes from regulators who appear to be hostile to the crypto industry, it will be less clear.
According to Peirce, it is not appropriate to use enforcement action to tell people what the law is in an emerging industry. In addition, staking services are not uniform. For this reason, a one-off enforcement action, and “cookie-cutter analysis does not cut it.”
Most concerning, though, is that our solution to a registration violation is to shut down entirely a program that has served people well. The program will no longer be available in the United States, and Kraken is enjoined from ever offering a staking service in the United States, registered or not. A paternalistic and lazy regulator settles on a solution like the one in this settlement: do not initiate a public process to develop a workable registration process that provides valuable information to investors, just shut it down.
