Algorand Foundation CEO: SEC’s Crypto Crackdown Highlights Lack of Regulatory Clarity
Had the U.S. Securities and Exchange Commission (SEC) laid out clear guidelines, centralized crypto exchange Kraken and its staking-as-a-service platform could have been within the purview of the regulatory agency, said Staci Warden, CEO of the Algorand Foundation.
Instead, Kraken is “being punished, as opposed to given guidance,” Warden told CoinDesk TV’s “First Mover” on Monday.
Last week, the SEC reached a $30 million settlement with Kraken and the San Francisco-based exchange “immediately” closed down its staking-as-a-service platform to its U.S.-based customers.
Kraken began offering staking services in 2019. However, according to the regulator’s press release, its staking services were promoting the sale of an unregistered security.
Warden said that if Kraken’s protocol had been more of a “pass-through profit-taking from the underlying protocol,” the agency might have been fine with Kraken.
The SEC could argue that because Kraken is an exchange that happens to offer digital assets, it should still be regulated like other exchanges that fall under the agency’s jurisdiction, she added.
According to Warden, the broader issue is that regulation for crypto has yet to be defined.
The SEC also reportedly plans to sue stablecoin issuer Paxos, a fintech firm that offers crypto services, over its alleged sale of an unregistered security, stablecoin token Binance USD (BUSD).
“It’s not the regulation so much, it’s the way that regulation is taking place,” Warden said. She added that regulation by enforcement and the lack of regulatory clarity is making it difficult for crypto platforms to know what the agency wants from them.
That may, in turn, have a substantial impact on crypto and the use of stablecoins and staking, which Warden said are “important primitives” to the industry overall.
“They are trying to do the right thing,” Warden said of the industry, pointing to Kraken and Coinbase as examples. “And with some better regulatory clarity upfront, they would have, in my view, probably done exactly what the SEC needed them to do,” Warden said.