Feb 10, 2023
Crypto Community Outraged Over SEC Charges Against Kraken
The crypto community has been up in arms over the recent charges brought against crypto exchange Kraken by the United States Securities and Exchange Commission (SEC). The SEC claims that Kraken’s staking-as-a-service program constitutes a security under its purview, and has sought to settle the charges by requiring Kraken to pay a $30 million fine and immediately cease offering staking services to U.S. retail investors.
The move has been met with criticism from investors, politicians, industry executives, and the general crypto community. Adam Cochran, partner of Cinneamhain Ventures and Ethereum bull, called out SEC chief Gary Gensler, describing him as “an agent of an anti-crypto agenda” and questioning why the same standards weren’t applied to Sam Bankman-Fried and FTX. Kristin Smith, CEO of the Blockchain Association, argued that the situation is a textbook example of why Congress should be working with industry players to forge appropriate legislation, rather than the SEC. U.S. Congressman Tom Emmer reiterated the importance of staking in the crypto ecosystem and warned that the “purgatory strategy” will hurt “everyday Americans the most”, as they will be forced to seek services offshore.
The SEC’s charge has also prompted Ryan Sean Adams, founder of the Ethereum show Bankless, to suggest that the SEC could have taken other measures rather than charging Kraken out of the blue. He suggested that the SEC could have mandated proof-of-reserves, required staking transparency, and supported decentralized staking. However, not all were against the SEC’s decision. Prominent Bitcoin bull Michael Saylor agreed with Gensler’s analysis that retail investors “lose control” of their tokens when they’re delegated to external staking service providers.
The debate has also prompted Coinbase CEO Brian Armstrong to say that “regulation by enforcement” would be a “terrible path” for U.S. innovators, as they’ll be forced to push more of their services offshore.
The SEC’s action against Kraken has led to a surge in interest around NFTs, crypto, and web3. Companies are now looking to capitalize on this interest by leveraging NFT marketing, Twitter NFT marketing, and NFT promotion to boost their brand. NFT marketing agencies are popping up to help companies create and execute successful NFT campaigns, while web3 agencies are helping companies to sell NFTs and promote their projects.
Ultimately, the SEC’s charges against Kraken have sparked a much-needed conversation around the need for appropriate regulation in the crypto space. With the right legislation in place, the U.S. could become a leader in the web3 space and benefit from the innovation that comes with it.
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