SEC chair urges crypto industry to take note of Kraken case

Cryptocurrency platforms should “take note” of Kraken’s decision to shut down its staking program for U.S. customers. SEC Chairman Gary Gensler, SEC said on CNBC.

“Companies like Kraken can offer investment contracts and investment schemes, but they must disclose full, fair, and truthful information. And this puts investors who are looking at your program in a more advantageous position. This is our core deal. They did not comply with this fundamental law,” said Gensler.

In his words, the Kraken saga should draw the attention of market participants. When asked by the host what mandatory measures could be applied to other programs like Coinbase Earn, the agency head said that “labels”—credit, income, or earnings—do not matter.

“If someone takes their tokens and transfers them to this platform, the platform controls them, and guess what happens if they go bankrupt? You end up in the queue in bankruptcy court,” the official explained.

He also mentioned the community’s popular phrase “Not your keys, not your crypto” and urged platforms to “strive to ensure compliance” with existing rules.

Earlier, Bloomberg reported that Kraken is under investigation. The SEC’s attention was drawn to the staking program, the offering and sale of which the platform “did not register”.

According to the agency, the exchange did not admit or deny the charges, but agreed to close the program for American users and pay a $30 million fine.

According to Dune Analytics, the exchange ranks among the three largest Ethereum stakers, behind only Lido and Coinbase.

The SEC’s actions have drawn not only community displeasure but also government criticism. stated that mandatory regulation “is not an effective and fair way, and U.S. Representative Tom Emmer pointed to the important role of staking “in building the next generation of the internet”.

She said the SEC has long known about staking, but the regulator did not attempt to discuss the issue with industry representatives. The Commission’s actions she called “arbitrary”.

“Yesterday’s decision, in essence, said: ‘Let’s just close this.’ That approach cannot be the answer,” Peirce stressed.

Earlier, Coinbase CEO Brian Armstrong spoke out against the staking ban for retail investors, calling it “a terrible path”.

As reported on February 7, Gensler said that cryptocurrency regulation is on the Commission’s priority list for 2023.