Feb 11, 2023

SEC Commissioner Blasts Agency Over Kraken Staking Shutdown

The United States Securities and Exchange Commission (SEC) has come under fire from its own commissioner, Hester Peirce, over the shut down of crypto exchange Kraken’s crypto staking program in the United States.

In a statement released on February 9th, titled “Kraken Down”, Peirce rebuked the SEC for its “one-off enforcement actions and cookie-cutter analysis”, arguing that regulation by enforcement “is not an efficient or fair way of regulating” an emerging industry.

The commissioner went on to criticize the regulator for shutting down a “program that has served people well”, and suggested that the SEC should have initiated a “public process to develop a workable registration process that provides valuable information to investors.”

Coinbase CEO and co-founder Brian Armstrong agreed with Peirce’s comments in a tweet, suggesting that requiring businesses to register its staking services is a “disingenuous offer” as there is no clear path to registration.

The SEC had announced on February 9th that it had reached a $30 million settlement with Kraken, saying it failed “to register the offer and sale of their crypto asset staking-as-a-service program.”

Kraken said in a blog post that it would still offer staking services to non-U.S. customers through a subsidiary, but according to the SEC announcement, the firm is permanently banned from providing staking services to U.S. residents, even if they sought to register it with the regulator.

Peirce, also known as the SEC’s “Crypto Mom”, is a strong advocate for the crypto industry and has proposed a “safe harbor” for token projects which are looking to build decentralized networks. In her updated proposal on April 13, 2021, Peirce suggested a three-year grace period in which network developers would be exempt from SEC legal action.

As the crypto space continues to grow and evolve, so too does the need for a regulatory framework that is able to keep up with the pace of innovation. NFTs, digital tokens, and other crypto assets are becoming increasingly popular, and it is essential that the SEC is able to establish a clear, fair, and efficient process for registering and promoting these new technologies.

For businesses looking to sell NFTs, it is important to understand the legal implications of doing so and to ensure that any marketing and promotion activities are conducted in accordance with SEC regulations. It is also important to work with a web3 agency and NFT marketing agency that have experience in this space, as they can provide valuable guidance and advice on how to best leverage the power of crypto and NFTs to drive growth and engagement.

Ultimately, the SEC must take a proactive approach to regulating the crypto space in order to ensure that investors are protected and that the industry can continue to thrive. Commissioner Peirce’s comments are a reminder of the importance of establishing a clear and fair regulatory framework that allows businesses to innovate and take advantage of new technologies without fear of legal repercussions.

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