Feb 11, 2023

SEC Commissioner Slams Agency Over Crypto Staking Shutdown

The United States Securities and Exchange Commission (SEC) has been the subject of public criticism recently, as Commissioner Hester Peirce has rebuked the agency for its 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.”

Peirce further slammed the regulator for shutting down 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.

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.” As a result, Kraken is permanently barred from providing staking services to U.S. residents, even if they sought to register it with the regulator.

Kraken said in a Feb. 9 blog post that it would still offer staking services to non-U.S. customers through a subsidiary.

Commissioner Peirce, also known as the SEC’s “Crypto Mom,” has been a strong advocate for the crypto industry during her time at the regulator. In 2021, 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 shutdown of Kraken’s staking program is part of a larger trend of increased regulation of the crypto industry. The SEC has also launched a probe into Coinbase, which is related to its staking services, and the agency has been cracking down on NFTs, issuing warnings to companies selling NFTs without proper disclosure.

The SEC’s crackdown on the crypto industry has led to a flurry of activity in the NFT marketing space, as companies look to promote their NFTs and crypto projects. Twitter NFT marketing has become increasingly popular, as well as the use of NFT marketing agencies and web3 agencies to help companies sell NFTs and promote their crypto projects.

The SEC’s actions have had a chilling effect on the crypto industry, but with Commissioner Peirce’s advocacy and the emergence of new marketing and promotion strategies, the industry is likely to continue to grow and evolve.

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