After the United States Securities and Exchange Commission revealed that it had reached a settlement with the cryptocurrency exchange Kraken, the chair of the SEC, Gary Gensler, issued a warning to crypto businesses, urging them to “come in and respect the law.”
During an appearance on CNBC’s Squawk Box on February 10, 2018, Gensler said that cryptocurrency exchanges should register with the SEC in order to be in compliance with rules in the United States. He claimed that many participants in the business were “choosing” not to do so. The head of the Securities and Exchange Commission (SEC) said that the business models of many cryptocurrency projects were “rife with conflict,” and that these projects needed to “disentangle” their bundled goods.
According to Gensler, “time-tested norms and laws to safeguard the investing public” are necessary for the industry to have any hope of surviving and thriving in the future. “Don’t put your hand in the customer’s wallet by utilizing their money for your own platform,” the sales pitch advised.
After the SEC announced that it had reached a settlement with Kraken, Gensler made his statement. As part of the settlement, Kraken agreed to pay $30 million in disgorgement, prejudgment interest, and civil penalties. Additionally, the exchange agreed to cease offering its staking services and programs to customers in the United States. Kraken said that it will keep providing staking services for customers located outside of the United States via a different business.
There has been a lot of backlash to the settlement that the SEC reached because many people see it as regulators taking action against companies that need to navigate a regulatory landscape that does not have clear standards. Hester Peirce, a commissioner for the SEC, said that the staking program had “served individuals well” and that the SEC’s actions might be described as “lazy and patronizing.”