Crypto Leaders Respond to SEC’s Staking Crackdown: Is Staking a Security?
The leaders of Kraken and Coinbase, CEO Jesse Powell and Chief Legal Officer Paul Grewal, have expressed their disappointment in the recent enforcement action taken by the U.S. Securities and Exchange Commission (SEC) against crypto staking.
SEC Chairman Gary Gensler claimed that Kraken had failed to properly inform the public of the risks associated with staking digital assets on its platform. However, Powell disputed this claim and indicated that it would have been a simple process to follow the necessary regulatory requirements.
Oh man, all I had to do was fill out a form on a website and tell people that staking rewards come from staking? Wish I'd seen this video before paying a $30m fine and agreeing to permanently shut down the service in the US. How dumb do I look. Gosh. ⛽️💡https://t.co/UPdQdnI6xN
— Jesse Powell (@jespow) February 10, 2023
Grewal weighed in on the matter, stating that staking is a legitimate form of investment for digital asset holders and that rules and regulations could address any concerns. He answered common questions about staking and explained that it is a way to earn rewards by helping secure a blockchain.
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He noted that the SEC’s enforcement action against Kraken may have been based on the structure of its staking service, but not the underlying assets themselves.
Hoskinson emphasized that staking mechanics do not make the underlying asset a security and that it is possible to structure commodities, such as wheat or gold, as securities without affecting their underlying nature.