Kraken CEO Jesse Powell and Coinbase’s top legal officer Paul Grewal are outspoken critics of the U.S. Securities and Exchange Commission’s (SEC) new move against crypto staking.
Gary Gensler, chairman of the Securities and Exchange Commission, said on CNBC in an interview that Kraken was not explaining to the public the full risks involved with staking digital assets on the platform.
According to Gensler, Kraken “known how to register” on the SEC website for regulatory obligations, but failed to do so.
Powell responded by implying that Gensler’s assertion was false. Paul Grewal, chief legal officer of Coinbase, also weighs in on the events, answering some of the most often asked issues about crypto staking. According to Grewal, Regardless of SEC monitoring staking is an essential and valid type of investing for digital asset holders.
Staking is a method of earning incentives for helping to secure a blockchain. Most networks that depend on staking, including all of the ones we offer, reward users with their own token, the value of which fluctuates similarly to other digital assets.
All of this may and would be addressed by rules and regulations. In the end, this is why Congress originally enacted the Administrative Procedure Act. Enforcement is a poor alternative for regulation.”
Charles Hoskinson, a developer of Cardano (ADA), addressed the apparent ambiguity of the SEC’s position on crypto staking. According to Hoskinson, the SEC may be stating that Kraken’s staking service structure breaches rules, but not the underlying assets themselves.
Clearly, there will be a national conversation about these issues, particularly now that Kraken and others are engaged. It does not seem that anybody is attempting to assert, “Well, the staking procedures have somehow transformed the underlying asset into a 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.”
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