The crypto industry has been in a seemingly endless state of confrontation since its inception, battered by endless waves of fear, uncertainty and doubt, butting up repeatedly against not just cynicism, but sometimes outright hostility.
As a result, crypto developers, users and advocates have become battle-hardened (figuratively speaking) and don’t flinch when a new obstacle is planted in the road, or if prices suddenly plunge off a cliff.
The latest unfolding crypto conflict, though, should come as no surprise, as it has been heading down the line for a long time. It is, of course, the aggressive wrangling now taking place over regulation, primarily between crypto platforms and the Securities and Exchange Commission (SEC) in the US, which has fired shots and is now prompting bigger players in the crypto game to take a robust stand.
Kraken and Binance USD
Last week, it was announced that the popular crypto exchange Kraken had reached an agreement with the SEC to shut down its Ethereum staking service for US customers, along with paying a $30 million settlement, after failing to register its staking program.
However, the SEC received no shortage of intense criticism for its actions, not least from the dissenting SEC commissioner Hester Peirce who observed that the commission had again unfairly chosen “to speak through an enforcement action.”
Meanwhile, Adam Cochran, a partner at venture capital firm CEHV, pointed out that settlements such as that agreed to by Kraken do not establish legal precedents, and so the crypto industry must take the battle to the courts. Further, he identified presciently that the SEC chair Gary Gensler is “working his way up the food chain,” indicating that a meaningful confrontation will occur when the SEC clashes with a sizeable company not willing to fold.
In further regulatory news, the New York Department of Financial Services (NYDFS) has ordered finance and technology company Paxos Trust to cease issuing the Binance USD stablecoin (which is owned and issued by Paxos in partnership with Binance), which the SEC alleges is an unregistered security.
Coinbase Makes an Entrance
In response to the SEC mobilizing aggressively, the Chief Legal Officer at Coinbase, Paul Grewal, published an official post. It clearly explains what staking actually is, from a technical perspective, in order to illustrate how staking services do not fall within the definition of security, indicating in the process how existing…
