The Securities and Exchange Commission’s (SEC’s) decision to close Kraken’s U.S.-based staking-as a service business could lead to an industry-wide crackdown. Zachary Fallon, who was a former special advisor to the regulator’s General Counsel and previously served as senior special counsel to Director of the Division of Corporate Finance, said that “this isn’t a condemnation of stake writ large.”
Fallon stated that “this is not a condemnation Kraken’s stake program specifically” on CoinDesk TV’s “First Mover.”
The SEC announced that it has reached a settlement with Kraken in San Francisco, which will “immediately” end its crypto-staking-as a service platform for U.S customers. It will also pay a $30 million fine.
Fallon pointed out that the exchange didn’t deny or admit any wrongdoing.
He stated that the SEC’s decision is an “obvious shot across to others” offering staking services for U.S. retail customers. He said that the circumstances could have been different if Kraken’s staking programme had been “merely technological connective tissue for the underlying protocol.”
Kraken said that Kraken had “essentially run a program over top of the protocol’s output.”
According to the regulator’s press releaseAccording to the article, “When investors give tokens to staking as-a-service providers they lose control and take on the risks associated with these platforms with very little protection.”
Proof-of-stake allows for the integrity of a blockchain to be maintained by making sure users can’t make coins they haven’t earned. Proof-of-stake is based on proof of stake. This means that users can prove how much they have invested in a blockchain such as Ethereum. However, some delegate their node operations, such as Kraken, to third-party operators.
Fallon claims that the SEC is more interested in announcing enforcement actions and expecting the crypto sector to follow suit than providing legal guidelines.
Through actions such as the, “We’ve seen it over the years.” Initial coin offering He said that the (ICO) crackdown was underway.
Cryptography is governed by the SEC, who uses a fact- and circumstance-based test to determine its oversight.
Fallon stated that “the SEC makes its points” and it is up to the private market to either comply or rely on other facts and circumstances to achieve a different result.
He said that the downside to taking a specific action is that it could only be done in light of these facts and circumstances.
Fallon stated that “To the extent they’re different facts and different circumstances, you might get a different result.”
He says the industry should “stay tuned” for now.
Continue reading: Kraken to Shut US Crypto-Staking Service; Pay $30M Fine in SEC Settlement