Feb 11, 2023

Kraken Fined $30 Million for Unregistered Staking-as-a-Service Program

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Cryptocurrency exchange Kraken recently incurred a hefty fine of $30 million from the United States Securities and Exchange Commission (SEC) due to its staking-as-a-service program. The SEC claims that the program qualifies as securities under its purview and that Kraken failed to register it.

The move has drawn the ire of the crypto community, with Ethereum bull Adam Cochran calling out SEC chief Gary Gensler 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 at hand is a textbook example why Congress — not the SEC — should be working with industry players to forge appropriate legislation.

U.S. Congressman Tom Emmer — who has long been a critic of Gary Gensler — reiterated the importance of staking in the crypto ecosystem, explaining that staking services will play an important role in “building the next generation of the internet” and arguing that the “purgatory strategy” will hurt “everyday Americans the most” as they may soon be forced to fetch such services offshore.

Ryan Sean Adams, the founder of the Ethereum show Bankless, suggested to his Twitter followers that the SEC could have taken other measures rather than charging Kraken out of the blue, such as mandating proof-of-reserves, requiring staking transparency, and supporting decentralized staking.

However, not all were against the SEC’s decision. 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. Attorney and chief policy officer of the Blockchain Association, Jake Chervinsky, noted that such “settlements are not law” and that Kraken’s decision to settle was likely an economic decision rather than a legal one.

The 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 SEC’s decision to charge Kraken has sparked a debate about the role of staking services in the crypto space, as well as the implications of the SEC’s enforcement of crypto regulations. Staking has become an increasingly popular way for crypto users to earn income from their holdings, and the implications of the SEC’s decision could have a major impact on the crypto industry.

NFTs (non-fungible tokens) are a popular use case of staking technology, and the SEC’s decision could have a major impact on the NFT market. NFTs are digital assets that are unique and cannot be replaced, and they have become increasingly popular as a way to promote and sell digital artwork, music, and other digital assets.

NFTs are also gaining traction in the marketing world, as they provide a unique way to promote products and services. NFTs can be used to promote a brand, launch a product, or even reward customers for their loyalty. NFT marketing agencies are emerging to help brands and businesses leverage NFTs for marketing purposes, and Twitter NFT marketing is becoming increasingly popular as a way to engage customers and build relationships.

The SEC’s decision to charge Kraken could have a major impact on the NFT marketing landscape, as it could lead to more stringent regulations for staking services. This could make it more difficult for NFT marketing agencies to offer staking services, and it could also make it more difficult for businesses to promote and sell their NFTs.

Ultimately, the SEC’s decision to charge Kraken has sparked a debate about the role of staking services in the crypto space, as well as the implications of the SEC’s enforcement of crypto regulations. It remains to be seen what the long-term implications of the decision will be, but it is clear that it could have a major impact on the crypto industry and the NFT market.