The US Securities and Exchange Commission (SEC) reached a settlement of $30 million with crypto platform Kraken, for the exchange’s failure to register its staking-as-a-service program.
Kraken is no longer able to offer staking-as-a-service in the US, but has announced that the program will still be provided to overseas customers through a subsidiary.
The service would have allowed investors to transfer assets to crypto for staking to receive annual investment returns up to 21%.
SEC commissioner Hester Peirce spoke out against the move in a statement, claiming that the takedown was a heavy a blow on a service that was “serving people well”.
She continued: “Using enforcement actions to tell people what the law is in an emerging industry is not an efficient or fair way of regulating. Moreover, staking services are not uniform, so one-off enforcement actions and cookie-cutter analysis does not cut it.”
Chair of the SEC, Gary Gensler took to Twitter to explain that without providing proper disclosures and verifying the program with a regulatory authority, investors could have been exposed to unfair ownership clauses and been susceptible to heavier losses.
Peirce furthered that instead of banning the service, a process for workable registration should have been provided to investors moving forward.
The SEC similarly received backlash from trading firms Gemini and Genesis after fining them for unregistered securities, leading to the shutdown of Gemini’s crypto lending scheme.