Feb 10, 2023
Crypto Community Outraged Over SEC’s Kraken Charges
The crypto community is up in arms over the recent announcement by the United States Securities Exchange Commission (SEC) that it has settled charges with Kraken for failing to register its crypto asset staking-as-a-service program. Kraken has agreed to pay $30 million in fines and to immediately cease offering staking services to U.S. retail investors, though they will continue to be offered offshore.
This move has been met with criticism from not only the crypto community but also from investors, politicians and industry executives. Adam Cochran, a partner at Cinneamhain Ventures and Ethereum bull, took to Twitter to question why the same standards hadn’t been applied to Sam Bankman-Fried and FTX.
Kristin Smith, CEO of the Blockchain Association, issued a statement on Twitter regarding the situation, arguing that this is a textbook example of why Congress, not the SEC, should be working with industry players to craft appropriate legislation. U.S. Congressman Tom Emmer echoed this sentiment, noting that staking services will play an important role in the development of the next generation of the internet and that the “purgatory strategy” of the SEC will hurt everyday Americans the most.
Ryan Sean Adams, the founder of the Ethereum show Bankless, suggested that the SEC could have taken other measures instead of charging Kraken out of the blue. He proposed that the SEC could have mandated proof-of-reserves, required staking transparency and supported decentralized staking.
Not everyone was against the SEC’s decision. Michael Saylor, a prominent Bitcoin bull, agreed with Gary Gensler’s analysis that retail investors lose control of their tokens when they are delegated to external staking service providers. Jake Chervinsky, attorney and chief policy officer of the Blockchain Association, pointed out that such “settlements are not law” and that Kraken’s decision to settle was likely an economic decision rather than a legal one.
The SEC’s charge towards enforcing action against staking service providers has 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 situation has highlighted the need for further clarity on the rules and regulations surrounding staking and NFTs, as well as the need for more comprehensive NFT marketing and promotion. With the rise of NFTs and the web3 space, it is now more important than ever for businesses to have access to the right NFT marketing agency and web3 agency to ensure their success. As such, many businesses are now turning to Twitter NFT marketing as a way to promote their NFTs and increase their chances of success when selling NFTs.
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