The Securities and Exchange Commission triggered another wave of outrage in the crypto world after the regulator announced a settlement that could end a key industry practice.
Staking can be lucrative for investors, with annual returns of as much as 21%, the SEC said. It's incredibly popular in crypto with proponents touting the"passive income" that investors could earn. The settlement with Kraken"should make clear to the marketplace that staking-as-a-service providers must register and provide full, fair, and truthful disclosure and investor protection," SEC Chair Gary Gensler said in a statement.
Before the SEC settlement was announced, Brian Armstrong, CEO of Coinbase, another San Francisco crypto exchange, tweeted that the company was"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." He accused the SEC of resorting to enforcement actions, instead of working with crypto companies to clarify the rules.
"Regulation by enforcement doesn't work," Armstrong said in a tweet."It encourages companies to operate offshore, which is what happened with FTX." "Rather than wading into whether the digital assets traded by the firms are securities, the SEC is instead concluding — correctly, I believe — that the service offerings provided by the exchanges themselves constitute unregistered securities," he told The Examiner.