Fun

‘Midnight Massacre:’ SEC Crackdown on Crypto Staking Services Prompts Speculation of Further Enforcement Actions

News Feed - 2023-02-11 06:02:14

‘Midnight Massacre:’ SEC Crackdown on Crypto Staking Services Prompts Speculation of Further Enforcement Actions


On Feb. 9, 2023, the cryptocurrency community learned of the U.S. Securities and Exchange Commission’s (SEC) crackdown on staking services. The SEC fined Kraken, a cryptocurrency exchange, $30 million for offering an “unregistered offering” related to its U.S. staking service. Digital currency advocates are now debating what constitutes a yield product versus a noncustodial solution that is not considered a security. Fox News journalist Eleanor Terrett predicts more regulatory crackdowns on the crypto space in the coming weeks, including enforcement actions against exchanges and banks. Observers Weigh in on the Future of Crypto Staking After SEC Crackdown


There is much discussion regarding the recent actions taken by the top U.S. securities regulator against crypto exchange Kraken and its staking service. The day before, Brian Armstrong, CEO of Coinbase, warned that he had heard rumors the SEC would attempt to eliminate cryptocurrency staking for retail customers in the United States. The next day, Kraken announced it was ending staking services for U.S. customers. The SEC, chaired by Gary Gensler, disclosed that the regulator settled with Kraken over the issue for $30 million for civil penalties and disgorgement.


On Thursday, Gary Gensler emphasized that cryptocurrency exchanges must comply with regulatory policies when offering investment vehicles to retail customers in the United States. During an interview with CNBC’s “Squawk Box” on Friday, Gensler repeated this stance. “Companies like Kraken can offer investment contracts and investment schemes, but they must provide full, fair, and truthful disclosure,” Gensler said. “This protects the investors who watch your program. That’s the basic law, and they were not following it.”


The enforcement actions have sparked discussions about what constitutes a yield product versus a noncustodial solution that is not considered a security. Economist and trader Alex Krüger weighed in. “Positive narrative spin for later,” Krüger tweeted. “Banning U.S. exchanges/custodians from offering staking services will push staking offchain or abroad, making Ethereum decentralized and beyond the reach of U.S. regulators. Decentralized Ethereum is better Ethereum.” Fox News Reporter Told Imminent Regulatory Enforcement Actions Against Crypto Exchanges, Banks, and Token Issuers Coming Shortly


SEC commissioner Hester Peirce expressed a dissenting opinion and disagreed with the actions. Peirce said it was “most concerning” that the SEC’s “solution to a registration violation is to shut down entirely a program that has served people well.” The commissioner emphasized that “a paternalistic and lazy regulator settles on a solution like the one in this settlement: instead of initiating a public process to develop a workable registration process that provides valuable information to investors, it simply shuts it down.”


According to Coinbase chief legal officer Paul Grewal, Coinbase’s staking service is different. “Coinbase’s staking program is not affected by [Thursday’s] news,” Grewal explained in a statement. “What’s clear from [Thursday’s] announcement is that Kraken was essentially offering a yield product. Coinbase’s staking services are fundamentally different and are not securities.” In addition to the latest crackdown on staking, rumors are circulating that more regulatory enforcement is on the horizon.


On Thursday, Fox News reporter Eleanor Terrett reported that more regulatory action is expected to impact the cryptocurrency industry in the coming weeks. Terrett tweeted, “SCOOP: Gary Gensler is embarking on a ‘midnight massacre’ to bring all of crypto under his control. In the coming weeks, the SEC, New York’s Department of Financial Services, and the Office of the Comptroller of the Currency will bring enforcement actions against exchanges, banks, and entities that mint tokens in an attempt to label most of them as securities. I’m told Gensler’s strategy is to bring as many enforcement actions as possible while the 118th Congress is still getting settled.” Tags in this story 118th Congress, Alex Kruger, banks, Brian Armstrong, bring enforcement actions, bring under control, coming weeks, comptroller of the currency, Cryptocurrency, cryptocurrency industry, Eleanor Terrett, enforcement actions, Exchanges, Financial Services, Fox News, Gary Gensler, Gary Gensler"s strategy, getting settled, hester peirce, label securities, midnight massacre, New York"s Department of Financial Services, Office of the Comptroller of the Currency, Regulatory, regulatory action, regulatory crackdown, rumors circulating, SEC, Securities, Squawk Box, staking services, token issuers, token minting


What do you think the future holds for cryptocurrency in the face of increased regulatory enforcement actions? Share your thoughts and opinions in the comments below. Jamie Redman


Jamie Redman is the News Lead at Bitcoin.com News and a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written more than 6,000 articles for Bitcoin.com News about the disruptive protocols emerging today. Kraken CEO Calls on Congress to Protect US Crypto Industry Following Settlement With SEC Over Staking Program REGULATION | 4 hours ago Argentina Mulls Inclusion of Proof-of-Solvency Requirements in Crypto Regulation REGULATION | 14 hours ago


Image Credits: Shutterstock, Pixabay, Wiki Commons Previous articleKraken CEO Calls on Congress to Protect US Crypto Industry Following Settlement With SEC Over Staking Program Next articleGround Handling Firm to Use a Blockchain Document Solution at 28 Saudi Airports Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article. Read disclaimerShow comments More Popular NewsIn Case You Missed ItCentral Bank of Brazil Confirms It Will Run a Pilot Test for Its CBDC This Year


The Central Bank of Brazil has confirmed that the institution will run a pilot test regarding the implementation of its proposed central bank digital currency (CBDC), the digital real. Roberto Campos Neto, president of the bank, also stated that this ... read more.SEC Risks Violating Admin Procedure Act by Rejecting Spot Bitcoin ETFs, Says Grayscale Fed"s Bullard Wants to Raise Bank Rate to 3.5% by Year"s End, Hints at 75 Basis Point Rate Hike Survey: Adoption in Argentina Grows, With 12 out of 100 Adults Having Invested in Crypto Ethereum Foundation"s Financial Report Discloses It Holds $1.6 Billion in Assets, 80.5% Held in Ether

News Feed

XRP Set For Big Rally – Analyst Says ‘Double Digits’ This Year
Reason to trust Strict editorial policy that focuses on accuracy, relevance, and impartiality Created by industry experts and meticulously reviewed The highest standards in reporting and pu
Tristan Greene7 hours agoCrypto charities can exploit ‘gambler’s fallacy’ to reap larger donations — StudyAccording to the researchers, people’s penchant to misinterpret patterns could be a boon for charitable
Popular BTM Operator: Bitcoin of America Continues Rapid Expansion in 2022
Popular BTM Operator: Bitcoin of America Continues Rapid Expansion in 2022 sponsored Bitcoin of America is a popular virtual currency exchange, registered as a money services busine
Taiwanese music celebrity’s Solana memecoin sees wild price action after $40M presale
Zhiyuan Sun7 hours agoTaiwanese music celebrity’s Solana memecoin sees wild price action after $40M presaleDespite a largely successful sale, not all participants are happy about the volatile price action.4120 Total vi
Cryptocurrency Exchange Bitso Launches Interoperable QR Payments in Argentina
Cryptocurrency Exchange Bitso Launches Interoperable QR Payments in Argentina Bitso, a Mexico-based, Latam-focused cryptocurrency exchange, has launched an initiative that aims to
Bitget Expands Innovation Zone With Priority Access to Exceptional Projects
Bitget Expands Innovation Zone With Priority Access to Exceptional Projects press release PRESS RELEASE. Victoria Seychelles, 2023 – Bitget, the leading global crypto derivative e
Islamic Scholar Says Digital Currency is Not a ‘Fictitious Currency’
Islamic Scholar Says Digital Currency is Not a "Fictitious Currency" An Islamic scholar, Irshad Ahmad Ijaz, has asserted that digital currency is not fake currency and that it shou
Price analysis 5/10: BTC, ETH, BNB, SOL, XRP, TON, DOGE, ADA, AVAX, SHIB
Rakesh Upadhyay5 hours agoPrice analysis 5/10: BTC, ETH, BNB, SOL, XRP, TON, DOGE, ADA, AVAX, SHIBBitcoin’s failure to rise above the 20-day EMA increases the risk of a downward breakdown for BTC and many altcoins.1433
LBank Secures Virtual Asset Provider Registration to Operate in Italy
LBank Secures Virtual Asset Provider Registration to Operate in Italy press release PRESS RELEASE.Global crypto exchange LBank has registered as a Virtual Asset Provider with Italia
Nigeria’s tax watchdog proposes comprehensive crypto bill
Amaka Nwaokocha12 hours agoNigeria’s tax watchdog proposes comprehensive crypto billThe Federal Inland Revenue Service’s initiative to regulate cryptocurrency and update tax laws reflects a broader trend in Nigeria t
Arijit Sarkar1 hour agoCFTC Commissioner plans to modernize investor protection with technologyTo minimize the damages caused by financial fraud, Romero proposed the formation of the National Financial Fraud Registry —
$350K Bitcoin? Crypto Investment Firm CEO Predicts Massive Surge
Este artículo también está disponible en español. The Bitcoin space is buzzing again, but this time with eyebrow-raising predictions that seem almost too good to be true.