Cryptocurrency exchange Kraken has settled charges filed by the US Securities and Exchange Commission (SEC). About it says on the regulator’s website.
Earlier, a Bloomberg source reported on the ongoing investigation into the platform. According to a Feb. 9 press release, the agency’s attention was drawn to a staking program that Kraken “did not register” for offering and selling.
“Today’s action should send a message to the market that staking as a service providers must register and provide full, honest and truthful disclosure and investor protection,” SEC Chairman Gary Gensler said in a statement.
Kraken did not admit or deny the allegations, but agreed to terminate the program and pay $30 million in fines.
Company representative comment The Block clarified that restrictions are introduced only for customers from the United States.
SEC Commissioner Hester Pierce criticized her agency’s actions, saying that enforcement regulation “is not an efficient and fair way.
My thoughts on today’s Kraken settlement: https://t.co/mijt3MNN4U
— Hester Peirce (@HesterPeirce) February 9, 2023
“In the current environment, crypto-related offerings do not go through the SEC registration process. […] Instead of going down the path of studying staking programs and issuing recommendations, we again decided to speak through enforcement measures,” Pierce said.
It is the closure of a program that “has served the people well,” she says, that is most worrying.
“paternalistic and a lazy regulator settles for a solution like the one in this agreement: do not initiate a public process to develop a workable registration method that provides investors with valuable information, just close it, ”the official added.
The head of Coinbase, Brian Armstrong, supported Pierce’s opinion. According to him, the SEC’s requirement to register staking as an offering of securities is “disingenuous” due to the lack of a clear path for this.
well said. There was no way to register (a disingenuous offer).
“Using enforcement actions to tell people what the law is in an emerging industry is not an efficient or fair way of regulating.” https://t.co/6wVZZbQt23
— Brian Armstrong (@brian_armstrong) February 9, 2023
The exchange’s chief legal officer, Paul Grewal, noted that the news about Kraken did not affect Coinbase’s product offering.
Our customers’ rewards are tethered to realities. They depend on the rewards paid by the protocol and commissions that we disclose. We don’t play games. https://t.co/5E476oCmyl
— paulgrewal.eth (@iampaulgrewal) February 9, 2023
The actions of the SEC angered community members. Adam Cochran, a partner at Cinneamhain Ventures, called Gensler “an agent for the anti-cryptocurrency program” and wondered why the same standards were not applied to the failed FTX.
2/2
Gensler is not a regulator. He is an agent of an anti-crypto agenda, who only aims to wield his power as cudgel for those he doesn’t agree with.
So the big question then, is why didn’t FTX get this treatment?
Whose pocket is he in?
— Adam Cochran (adamscochran.eth) (@adamscochran) February 9, 2023
Blockchain Association CEO Christine Smith said the Kraken situation is “a textbook example” of why the US Congress should work with industry players to create a regulatory framework instead of the SEC.
The following statement is attributed to @KMSmithDC in response to today’s settlement between the SEC and Kraken:https://t.co/32KysvKfz0 pic.twitter.com/8vkWZXB6a2
— Blockchain Association (@BlockchainAssn) February 9, 2023
US House of Representatives member Tom Emmer, who has repeatedly criticized Gensler, pointed to the important role of staking “in creating the next generation of the Internet.”
To be clear, staking enables more people to participate in building the next generation of the internet.@GaryGensler‘s regulatory purgatory strategy hurts everyday Americans the most – leaving them in the dust while these opportunities are accessible offshore. https://t.co/8YlSuBVj6L
— Tom Emmer (@GOPMajorityWhip) February 9, 2023
“Gary Gensler’s strategy of regulative purgatory hurts ordinary Americans the most, leaving them in the dust when those opportunities are available overseas,” Emmer wrote.
Some in the community wondered how Kraken could have registered its product with the SEC when the agency “does not have a clear path to approve cryptocurrency staking.”
So they rule against Kraken for not registering with the SEC even though the SEC has no clear path to approve crypto staking in the first place?
How is that logical? Am I missing something?
— KingsVerdict 👑 (@KingsVerdict) February 9, 2023
However, not everyone opposed the Commission. Former MicroStrategy head Michael Saylor remarked that the SEC chairman “understands the importance of self-storage.”
“Not your keys…” – @GaryGensler. The @SECGov understands the importance of self-custody. https://t.co/oxPkFeJ77k
— Michael Saylor⚡️ (@saylor) February 9, 2023
Prior to this, Sailor supported strict regulation of the digital asset industry. In his opinion, this is a necessary element of its growth.
Amid news of the closure of the Kraken program IRS filed a motion to enforce an order sent to the exchange in 2021, pursuant to CoinDesk. This is a request for information about the clients of the platform and their transactions as part of the fulfillment of obligations to pay taxes.
The company emphasized that one of the guiding principles of Kraken is to ensure the security and privacy of users.
“The situation in this case has previously given Kraken no opportunity to weigh the situation. We look forward to solving our problems in court,” the press service said.
Recall that over the past year, the SEC opened 30 cases related to cryptocurrencies. Gensler later named digital asset regulation a work priority in 2023.
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