Crypto exchange Kraken has settled the charges brought by the U.S. Securities and Exchange Commission (SEC). This is говорится on the regulator’s site.
Earlier, Bloomberg reported that an investigation into the platform was underway. According to the February 9 press release, the agency’s attention was drawn to the staking program, the offering and sale of which Kraken “did not register.”
“Today’s actions should make clear to the market that staking-as-a-service providers must register and provide full, fair and truthful disclosure and investor protection,” said SEC Chair Gary Gensler.
Kraken neither admitted nor denied the charges, but agreed to shut down the program and pay $30 million as a penalty.
A company spokesperson told The Block that the restrictions apply only to customers in the United States.
SEC Commissioner Hester Peirce criticized the agency’s actions, saying that enforcement regulation “is not an efficient and fair way” to regulate.
My thoughts on today’s Kraken settlement: https://t.co/mijt3MNN4U
— Hester Peirce (@HesterPeirce) February 9, 2023
“Under current market conditions, crypto offerings are not going through the SEC registration process. … Rather than charting staking programs and issuing guidance, we again chose to speak through enforcement actions,” Peirce noted.
She said the greatest concern is the closure of the program, “which served people well”.
“Paternalistic and lazy regulator stops at a decision 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 shut it down,”
— added the official.
Coinbase CEO Brian Armstrong backed Peirce’s view. He said the SEC’s requirement to register staking as a securities offering is “disingenuous” due to the lack of a clear path for doing so.
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 Kraken news did not affect Coinbase’s product offerings.
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
SEC actions drew ire from members of the community. Adam Cochran, partner at venture firm Cinneamhain Ventures, called Gensler “an agent of the anti-crypto agenda” and asked why the same standards were not applied to the fallen 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
CEO of the Blockchain Association Christine Smith said the Kraken situation is a textbook example of why Congress should work on creating a regulatory framework with industry players rather than 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 Representative Tom Emmer, who has repeatedly criticized Gensler , noted the important role of staking “in building 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
“The regulatory purgatory strategy of Gary Gensler harms everyday Americans the most, leaving them in the dust while these opportunities are available abroad,” Emmer wrote.
Not everyone in the community welcomed the Commission. MicroStrategy’s former head Michael Saylor noted that the SEC chair “understands the importance of self-custody.”
«Not your keys … » — @GaryGensler. The @SECGov understands the importance of self-custody. https://t.co/oxPkFeJ77k
— Michael Saylor⚡️ (@saylor) February 9, 2023
Before that, Saylor supported strict regulation of the digital assets industry. In his view, this is a necessary element of its growth.
Against the Kraken program’s closure, the Internal Revenue Service IRS filed a motion to compel enforcement of an order issued to the exchange in 2021, according to CoinDesk. The order seeks information on the exchange’s customers and their transactions as part of tax collection.
The company stressed that one of Kraken’s guiding principles is ensuring user security and privacy.
“The situation in this case had not previously given Kraken the opportunity to weigh its options. We look forward to resolving our problems in court,” the press office clarified.
As reported, last year the SEC brought 30 cases, related to cryptocurrencies. Gensler later described regulating digital assets as a priority for 2023.