Kraken will shut down its US crypto “staking” program and pay $30 million to settle SEC charges. It’s the regulator’s first big crackdown on firms that offer a return to customers who stake their crypto. Here’s what 9 top voices in the crypto world have to say about the Kraken move and what it means. Loading Something is loading.
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Kraken has agreed to shut down its crypto staking program in the US and pay $30 million to settle charges by the markets regulator, and that’s set off a wave of protest from the digital-asset industry.
They argue that the Securities and Exchange Commission hasn’t been clear about its rules for the crypto exchanges that offer staking services, and say its crackdown will stall innovation.
Staking is when investors agree to lock in their crypto assets for a period of time as a way of supporting a blockchain. In return, stakers can earn a percentage-based reward. The SEC said Kraken offered returns of as much as 21%.
Kraken came under fire for offering unregistered securities via its yield-bearing products, which meant it failed to have proper protections in place for their customers while allowing them to stake their crypto, according to the SEC.
It’s the first major clampdown on crypto yield programs by the regulator, and it’s sending shockwaves through the crypto world.
Here’s what 9 top voices in the crypto world have to say.Brian Armstrong, Coinbase CEO “We will keep fighting for economic freedom (our mission at Coinbase). Some days being the most trusted brand in crypto means protecting our customers from government overreach,” Armstrong said in the wake of the news.
One day before the Kraken-SEC was made public, the crypto exchange boss flagged that enforcement could be on its way.
“We’re hearing rumors that the SEC would like to get rid of crypto staking in the U.S. for retail customers. I hope that’s not the case as I believe it would be a terrible path for the U.S. if that was allowed to happen,” Armstrong said.
“Regulation by enforcement doesn’t work. It encourages companies to operate offshore, which is what happened with FTX,” he added.
Anthony Scaramucci, SkyBridge Capital founder “We are witnessing political overreach and likely an attempt to stall innovation in financial services. How about just stating what the rules are?” Scaramucci said in a tweet Thursday.
Hester Peirce, SEC commissioner AKA “Crypto Mom” “We have known about crypto staking programs for a long time. Although it may not have made a difference, I should have called for us to put out guidance on staking long before now,” Peirce said.
“Most concerning, though, is that our solution to a registration violation is to shut down entirely a program that has served people well.”
“A paternalistic and lazy regulator settles on a solution like the one in this settlement: do not initiate a public process to develop a workable registration process that provides valuable information to investors, just shut it down.”
Gary Gensler, SEC Governor “The storefronts and casinos people are investing in need to comply and disentangle bundled products. The business model is rife with conflicts,” Gensler told CNBC.
“If this field has a chance of survival, it needs laws to protect the investing public.”
Scott Melker, “The Wolf of All Streets” crypto trader”If you want to offer crypto staking, come into the SEC… so that we can sue you in person rather than waiting to do it later?” Melker said in a tweet. “Gensler offers no path to compliance. Just empty words and attacks after the fact.”
“These events, along with other recent developments such as Binance halting USD withdrawals and deposits, Signature bank distancing themselves from crypto, the SEC investigating Kraken for selling unregistered securities, and the Federal Reserve denying Custodia’s application for a master account, all point to mounting pressure against legitimate crypto activity in the US,” he said in a Substack post.
“This attack is misguided, but it is also precise.”
“It is clear that the US is going to war with the crypto industry,” he tweeted. “If it’s war they want, it’s war they’ll get.”
Kristin Smith, Blockchain Association CEO “The SEC continues its attack on U.S. crypto companies and retail investors, regulating by enforcement and undercutting the potential of public blockchain networks in the United States,” Smith said in a statement.
“Today’s settlement isn’t law, but is another example of why we need Congress — not regulators — to determine appropriate legislation for this new technology. Otherwise, the U.S. risks driving innovation offshore and taking online freedoms away from individual users.”
Jesse Powell, Kraken co-founder and CEO “Congress must act to protect the domestic crypto industry and US consumers who will now be going offshore to obtain services no longer available in the US,” Powell said.
In a response to Peirce, he said: “Thank you. Some guidance would be appreciated. The ‘This is wrong but I won’t tell you how to do it right. Want to find out if X works? Try it and see what happens.’ approach does not help the industry nor consumers. We aren’t anti-regulation but we need a clear path to operate.”
“I honestly hope that somebody proves, in court, that there is a legal, user-friendly version of custodial staking that can be offered to US consumers. It’ll be a brutal, lengthy, expensive fight and a massive distraction but the industry and the USA will be extremely grateful.”
Paul Grewal, Coinbase’s chief legal officer”Rules making clear these distinction would provide real clarity to the industry and our customers. The public shouldn’t have to parse complaints in federal court to understand what a regulator expects,” Grewal said in defense of Coinbase’s staking products.
Matthew Graham, Sino Global Capital CEO
“The core issue remains the lack of clarity and guidance. regulation by enforcement is to abdicate responsibility. it lacks fundamental fairness and it rejects healthy development of innovative markets,” Graham said.