The U.S. Securities and Exchange Commission (SEC) has taken action against crypto exchange Kraken, which serves as a reminder that the crypto space needs laws to protect investors. SEC Chair Gary Gensler stated in an interview that intermediaries should provide proper disclosures and safeguards required by securities laws when offering cryptocurrency services like lending and staking. Gensler added that this should put the entire crypto industry “on notice” to come into compliance.
The SEC’s recent crackdown on Kraken followed its enforcement action against Gemini and Genesis for offering and selling unregistered securities via their Gemini Earn lending program. SEC Commissioner Hester Pierce disagreed with the agency’s move, stating that using enforcement actions to tell people what the law is in an emerging industry is not an efficient or fair way of regulating.
Gensler responded by stating that the SEC has used tools provided by Congress to protect the investing public for decades and that enforcement can be used to protect investors when somebody is breaking the law or noncompliant. Crypto experts have called the move by the SEC a bad sign for staking as a service currently offered to investors in the United States.
It is clear that the crypto space needs regulation in order to protect investors. Those involved in the industry should take note of this and make sure they are compliant with relevant laws and regulations.
