Following the settlement reached by Kraken and its subsidiaries Payward Ventures and Payward Trading with the Securities Exchange Commission (SEC) on February 9, secured by Bitcoinist, Commissioner Hester M. Pierce stated in a report they do not agree and do not agree with the closure of the crypto exchange staking program.
Regulators say these staking programs must be registered with the SEC as securities offerings. SEC Commissioner Pierce, also known as “Crypto Mom,” said registration is possible in today’s crypto-related climate:
An offer like the staking service issued here raises many complex questions, including whether the staking program as a whole will be registered or whether the staking program of each token will be registered separately, whether disclosure is important, and what the accounting implications will be for Kraken.
Solution Or Poor Court By SEC?
The commissioner stated that the SEC has been aware of the staking program for a long time. Thus, he suggested that the SEC should adjust the guidance of the staking program “before this situation cracks like it did.” The commissioner added:
Instead of taking the path of thinking through the staking program and issuing guidance, we again choose to speak through enforcement actions, purporting to “remove to the market that providers of staking-as-a-service must register and provide complete, fair, and true disclosure and investor protection .
Pierce said that using enforcement actions to tell people what laws in a growing industry “is not efficient or fair to regulate.” For the Commissioner, one-off enforcement actions and “cookie-cutter” analysis do not provide a solution for crypto investors in the US.
But the most important thing is that the solution to registration violations is to kill all the programs that have served people well.
Kraken’s staking program will no longer be available in the United States, registered or not, Kraken is prohibited by the SEC from ever offering staking services in the US.
The SEC is not the only institution that has taken hostile action against the crypto industry in recent months. Therefore, the SEC has faced criticism from the US Senate since October 2022, claiming that the chairman of the SEC has exceeded his authority and taken a hostile attitude towards the financial industry.
The SEC recently experienced a staff exodus that caught the attention of the Senate, which sent a letter demanding to know why employees are leaving the state’s corporate watchdog at the highest rate in 10 years.
The letter issued and signed by 12 Senate Republicans is for public reference report by the SEC on October 13 from the Inspector General’s office detailing staff shortages and reports of dissatisfaction at the SEC.
According to the Inspector General’s report at the time, the SEC had been losing employees at a rapid rate over the past ten years. This data and the statement from Commissioner Peirce reinforces the idea that there is internal turmoil within the regulator, especially regarding the crypto industry and how to regulate it.
The market has reacted to the SEC’s settlement with Kraken by pulling back on the market’s most popular cryptocurrencies. Bitcoin is currently trading at $21,600. It has fallen 3.9% in the last 24 hours and 7.8% in the previous seven days.
Bitcoin lost the critical support level of $22,000 and is set to test the next support level left at $21,500. If it fails to hold the nearest support, it may continue to retreat towards the $20,000 area.
Feature Image from Unsplash, chart from TradingView.