Feb 11, 2023
SEC Commissioner Blasts Agency Over Shutdown of Kraken’s Crypto Staking Program
The United States Securities and Exchange Commission (SEC) has recently come under fire from its own Commissioner, Hester Peirce, over the shutdown of crypto exchange Kraken’s crypto staking program in the United States.
In a Feb. 9 statement titled “Kraken Down,” Peirce argued that regulation by enforcement is not an efficient or fair way of regulating an emerging industry. She wrote:
“Today, the SEC shut down Kraken’s staking program and counted it as a win for investors. I disagree and therefore dissent. Using enforcement actions to tell people what the law is in an emerging industry is not an efficient or fair way of regulating. Moreover, staking services are not uniform, so one-off enforcement actions and cookie-cutter analysis does not cut it.”
Peirce’s statement also expressed her disapproval of the shutdown of a “program that has served people well” and suggested 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 Feb. 9 tweet, suggesting that requiring businesses to register its staking services is a “disingenuous offer” as there is no clear path to registration.
Kraken revealed in an Aug. 9 SEC filing that it was also the subject of a SEC probe similar to the one that resulted in the settlement. On Feb. 9, the SEC announced 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 Feb. 9 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.
The SEC’s decision to shut down Kraken’s staking program has caused concern among many in the crypto community, as staking is an important part of the web3 space. Staking allows users to earn rewards for holding cryptocurrencies, and is a key part of the crypto and NFT ecosystems.
NFTs, or non-fungible tokens, are digital assets that are unique and can represent ownership of digital or physical assets, such as art, music, or real estate. They are becoming increasingly popular and are being used to promote and market businesses, products, and services.
The need for NFT promotion and marketing is growing and many businesses are turning to NFT marketing agencies to help them promote their NFTs. These agencies use a variety of methods, such as Twitter NFT marketing, to spread the word about NFTs and help businesses sell them.
Peirce, also known as the SEC’s “Crypto Mom,” has been a strong advocate for the crypto industry during her time at the regulator. She has 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 shutdown of Kraken’s staking program has raised questions about the future of crypto and NFTs in the US, and the effect it will have on the industry. It is clear that the crypto and NFT space needs clear regulations to ensure that businesses are able to operate and promote their products and services without fear of legal action.
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