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It’s been all drama in the crypto space over the last two days with the U.S. Securities and Exchange Commission (SEC) cracking down on crypto exchange Kraken. On Thursday, February 9, the SEC asked crypto exchange Kraken to discontinue its Crypto Asset Staking-As-A-Service Program while referring it to a sale of unregistered securities.
Crypto mon and SEC Commissioner Hester Peirce have expressed their dissent over SEC’s recent action on Kraken. She further called out the securities agency for lack of regulatory clarity thereby making it absolutely unclear as to which crypto firms should register with the SEC.
Peirce added that in the current scenario, crypto-related offerings aren’t at all making it through the registration process. She further added that there are a lot of anomalies regarding the registration of services like crypto staking.
It’s unclear whether an exchange should register the entire staking program or individually for the staking of separate tokens. Also, there’s no clarity on what could be the accounting implications for crypto exchanges like Kraken.
Hester Peirce added that crypto-staking programs have existed in the market for a very long time. She added that the SEC should have put its guidance long before in this matter.
Kraken’s Regulation Through Enforcement is not Right
In her message, Hester Peirce has called out against regulation through enforcement and stated that this is not the right approach in place. She wrote:
Instead of taking the path of thinking through staking programs and issuing guidance, we again chose to speak through an enforcement action, purporting to “make clear to the marketplace that staking-as-a-service providers must register and provide full, fair, and truthful disclosure and investor protection.”
The SEC Commissioner added that the most concerning part of the SEC’s solution around this is shutting down a program that’s “served people well”. A day before, Coinbase CEO Brian Armstrong had already warned of SEC’s plans to ban crypto staking. He has also backed Peirce’s comments over the SEC’s action on Kraken.
We will keep fighting for economic freedom (our mission at Coinbase). Some days being the most trusted brand in crypto means protecting our customers from government overreach.
— Brian Armstrong (@brian_armstrong) February 10, 2023
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