“ We’re technology neutral at the SEC, but we’re clearly very focused on American protection…330 million Americans are our clients. ”
U.S. Securities and Exchange Commission Chair, Gary Gensler, defended his agency’s move against crypto exchange Kraken on CNBC’s Squawk Box Friday morning, saying that it was necessary to protect the public from undisclosed risks.
“What Kraken was doing is asking the American public for their coins, crypto tokens, and saying ‘I’ll give you a return of 4 to 21 percent returns.’ The problem was that they were not disclosing to the investing public the risk that the investing public was entering into,” said Gensler.
Kraken, which is one of the largest crypto exchanges on the market, was charged for failing to register the offer and sale of their crypto asset staking-as-a-service program, in which investors use their own crypto assets on the platform in exchange for an annual investment return.
To settle the charges brought on by the SEC on Thursday evening, Kraken will pay $30 million in fines, and said it would immediately stop offering and selling securities through crypto asset staking services or programs.
“Companies like Kraken can offer investment contracts and investment schemes but they have to have full, fair, and truthful disclosure. This puts investors in a better position,” said Gensler. “They were not complying with that.”
When CNBC’s Andrew Ross Sorkin asked if Gensler worried that this would encourage investors to stake their crypto offshore, Gensler responded that the SEC is technology neutral as long as the technology is registered.
“We’re technology neutral at the SEC, but we’re clearly very focused on American protection…330 million Americans are our clients. Kraken knew how to register, other firms know how to register. It’s just a form on our website,” said Gensler. “If they want to offer staking, we’re neutral. Come in, register. Because investors need that disclosure. What are you doing with the tokens? Are you trading against the tokens? Are you borrowing against the tokens? Are you using them for your own purposes?
The latest news around banning crypto staking in the U.S. has resulted in a hit to crypto prices. The Bitcoin
BTCUSD,
price is $21,878.48, down 3.55% over the past 24 hours, according to CoinDesk data. And Ethereum
ETHE,
is trading at $1,545.88, down 5.61% over the past 24 hours, according to CoinDesk.