SEC Releases the Kraken …Settlement

Jack Solowey andJennifer J. SchulpYesterday, the Securities and Exchange Commission ( “SEC”)announced a settlement with centralized crypto exchange Kraken over its “staking‐​as‐​a‐​service program.” The service allowed users to earn rewards by indirectly participating in a process that helps to maintain and secure certain cryptocurrency networks. The SECalleged that Kraken ’s staking service constituted the illegal offer and sale of unregistered securities.In essence, the SEC ’s complaint contains two main allegations: one, that Kraken’s staking service involved the offer and sale of a type of security known as an investment contract, and two, that Kraken failed to register this security by filing a statement containing certain material information, as required under the Securities Act of 1933 and its implementing regulations.While reasonable securities lawyersmay disagree as to whether the specific facts and circumstances of the staking service at issue fit the definition of aninvestment contract (as elaborated in 76 years of case law), there ’s something unreasonable about the SEC insisting that crypto platforms register their staking serviceswithout the agency first providing those platforms with a clear means of, well, registering their staking services. Enforcement actions such as these are blunt instruments that are good for tearing things down and bad for creating the conditions in which to build. They scare awa...
Source: Cato-at-liberty - Category: American Health Authors: Source Type: blogs