Feb 11, 2023
SEC Commissioner Blasts Agency Over Kraken Staking Shutdown
The United States Securities and Exchange Commission (SEC) is facing criticism from within its own ranks over its decision to shut down the crypto staking program of the popular exchange Kraken. Commissioner Hester Pierce, known as the “Crypto Mom” for her advocacy of the crypto industry, has publically rebuked the agency in a statement titled “Kraken Down”.
In her statement, Pierce argued that regulation by enforcement is not an effective or fair way of regulating an emerging industry. She suggested that the SEC should have initiated a public process to develop a workable registration process that provides valuable information to investors.
Pierce’s statement was echoed by Coinbase CEO and co-founder Brian Armstrong, who agreed that requiring businesses to register its staking services is a “disingenuous offer” as there is no clear path to registration. Armstrong said that he had heard “rumors that the SEC would like to get rid of crypto staking in the U.S. for retail customers” and that it would be a “terrible path” for the U.S.
The SEC announced on Feb. 9 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.” This means that Kraken is now permanently banned from providing staking services to U.S. residents, even if they sought to register it with the regulator.
The news has raised questions about the future of crypto staking in the U.S., and how businesses can promote and market their services without running afoul of the SEC.
Crypto staking is a process by which investors transfer their crypto assets to an exchange or wallet provider in exchange for a set rate of return. It is a popular way of earning passive income from cryptocurrency holdings, and is becoming increasingly popular as the blockchain industry matures.
In response to the Kraken settlement, Commissioner Pierce has proposed a “safe harbor” for token projects which are looking to build decentralized networks. This proposal would give network developers a three-year grace period where they are exempt from SEC legal action.
The proposal is an important step forward in providing clarity to the industry, and could provide much-needed guidance to businesses looking to promote and market their NFTs, crypto staking services, and other web3-related services.
With the SEC’s stance on crypto staking still unclear, businesses may need to turn to alternative methods of promotion and marketing, such as NFT marketing and Twitter NFT marketing. These methods could be used to reach potential customers and increase awareness of their services, without running afoul of the SEC.
For now, businesses will be watching the SEC’s next move with interest, as it could have a major impact on the future of crypto staking in the U.S. and beyond.
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