Charles Hoskinson argues that the Cardano ecosystem is healthy after the SEC’s prohibition of the Kraken US Staking Service


Charles Hoskinson, a co-founder of Cardano (ADA), asserts that despite the U.S. Securities and Exchange Commission’s (SEC) assault on Kraken’s crypto-staking services, ADA is on sound ground.

In a recent YouTube video, Hoskinson asserts that the SEC’s charges against Kraken for breaking securities laws with respect to its staking services would necessitate a broader national debate on the matter.

By paying a $30 million fine and eliminating staking from its platform, Kraken resolved the dispute.

However, according to Hoskinson, it does not seem that the SEC is classifying blockchain projects like ADA as securities simply because staking is involved. Rather, the SEC appears to be targeting Kraken for the way the platform organized its staking services for customers.

Clearly, there will be a national conversation about these issues, particularly now that Kraken and others are engaged. There does not seem to be any effort to assert that the staking processes transform the underlying asset into security. You’ll likely encounter a great deal of FUD [fear, uncertainty, and doubt] on Twitter, Reddit, and other platforms stating, “Well, if staking is a security, then the underlying asset must also be a security.” Ether is currently a security. Or ADA is now considered a security.’

Wheat, which is a commodity, or gold, which is a commodity, may be packaged or structured in such a way that the package is a security or the activity that is being performed with it is regulated. However, this does not create wheat or gold securities. Therefore, there is no transitivity such that what you do with stake pools might imply an issue with the underlying asset. We have not yet seen any attempts to do so.”

However, Hoskinson concedes that the government’s future steps in regulating the cryptocurrency industry are rather unpredictable. He is also concerned that if the government seeks to expand staking restrictions, it may fail to differentiate between the various crypto staking schemes, such as ADA’s and Ethereum’s (ETH).

“Now, obviously, governments are unpredictable, facts and situations may change, and we see the same things you do, so we’ll cross that bridge when we get to it. Currently, the ecosystem is healthy. Therefore, I do not believe there is a problem with Cardano as it is. I do not believe there is a problem with our current staking approach. Unfortunately, combining the activities of Ethereum with Cardano may lead us in an unsettling road.”

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