Feb 11, 2023

SEC Commissioner Blasts Agency Over Kraken Shutdown

Hester Pierce, Commissioner of the United States Securities and Exchange Commission (SEC), recently voiced her dissent against the agency’s decision to shut down crypto exchange Kraken’s crypto staking program in the United States. In a statement titled “Kraken Down”, she argued that regulation by enforcement is not an effective or fair way to regulate the emerging industry.

Commissioner Pierce also criticized the SEC for shutting down a program that had been beneficial to many people. She stated that enforcement actions do not provide enough information to investors and suggested that the SEC should have initiated a public process to develop a workable registration process.

Brian Armstrong, CEO and co-founder of Coinbase, expressed his agreement with Commissioner Pierce’s comments in a tweet. He noted that there is no clear path for businesses to register their staking services, making it a “disingenuous offer”. Armstrong had previously expressed his concern that the SEC may be looking to get rid of crypto staking in the United States for retail customers, which he labeled as a “terrible path”.

Coinbase is currently the subject of a SEC investigation that is similar to the one that resulted in the Kraken settlement. The SEC announced on February 9 that Kraken had failed to register the offer and sale of their crypto asset staking-as-a-service program and reached a $30 million settlement with them.

Kraken will continue to offer staking services to non-U.S. customers, but they are permanently banned from providing staking services to U.S. residents, even if they sought to register it with the SEC.

Commissioner Pierce has been a strong advocate for the crypto industry during her time at the SEC. She proposed a “safe harbor” for token projects which are looking to build decentralized networks, in which the network developers would receive a three-year grace period where they were exempt from SEC legal action.

The SEC’s decision to shut down Kraken’s staking program has sparked debate in the crypto and web3 space. It has also highlighted the importance of NFT marketing and promotion, and the need for businesses to work with a web3 agency or NFT marketing agency to ensure their projects are compliant with the relevant regulations. Selling NFTs can be a lucrative business, but businesses must ensure they are following the law in order to avoid any legal issues.

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