On Feb. 9, 2023, the cryptocurrency community learned of the U.S. Securities and Exchange Commission’s (SEC) crackdown on staking services. The SEC fined Kraken, a cryptocurrency exchange, $30 million for offering an “unregistered offering” related to its U.S. staking service. Digital currency advocates are now debating what constitutes a yield product versus a noncustodial solution that is not considered a security. Fox News journalist Eleanor Terrett predicts more regulatory crackdowns on the crypto space in the coming weeks, including enforcement actions against exchanges and banks.
Observers Weigh in on the Future of Crypto Staking After SEC Crackdown
There is much discussion regarding the recent actions taken by the top U.S. securities regulator against crypto exchange Kraken and its staking service. The day before, Brian Armstrong, CEO of Coinbase, warned that he had heard rumors the SEC would attempt to eliminate cryptocurrency staking for retail customers in the United States. The next day, Kraken announced it was ending staking services for U.S. customers. The SEC, chaired by Gary Gensler, disclosed that the regulator settled with Kraken over the issue for $30 million for civil penalties and disgorgement.
On Thursday, Gary Gensler emphasized that cryptocurrency exchanges must comply with regulatory policies when offering investment vehicles to retail customers in the United States. During an interview with CNBC’s “Squawk Box” on Friday, Gensler repeated this stance. “Companies like Kraken can offer investment contracts and investment schemes, but they must provide full, fair, and truthful disclosure,” Gensler said. “This protects the investors who watch your program. That’s the basic law, and they were not following it.”
The enforcement actions have sparked discussions about what constitutes a yield product versus a noncustodial solution that is not considered a security. Economist and trader Alex Krüger weighed in. “Positive narrative spin for later,” Krüger tweeted. “Banning U.S. exchanges/custodians from offering staking services will push staking offchain or abroad, making Ethereum decentralized and beyond the reach of U.S. regulators. Decentralized Ethereum is better Ethereum.”
Fox News Reporter Told Imminent Regulatory Enforcement Actions Against Crypto Exchanges, Banks, and Token Issuers Coming Shortly
SEC commissioner Hester Peirce expressed a dissenting opinion and disagreed with the actions….
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