Algorand Foundation CEO Decries Crypto Crackdown, Challenges SEC to Offer Regulatory Clarity
Algorand Foundation chief executive Staci Warden decried the recent enforcement action by SEC to the crypto-native firms. She questioned the preference for punishing crypto firms instead of formulating clear guidelines.
SEC’s Enforcement Action Questionable
Warden wondered why the Gary Gensler-led Securities and Exchange Commission (SEC) punishes the crypto-native firms rather than lay out clear guidelines. The criticism of the SEC arises from the regulator’s decision to slap the Kraken crypto exchange with a $30 million fine. Instead, Kraken would have avoided the settlement since its staking-as-a-service product would have operated within the agency’s purview.
Besides settling the $30 million fine with the SEC, Kraken revealed that it would terminate the staking-as-a-service product from the U-based customers. The San Francisco-based exchange launched its staking services in 2019 as an innovative product for that investors would reap high returns. Years later, SEC would consider the high-yield product illegal and allege Kraken executed the sale of an unregistered security.
Crypto Firms Becoming Victims of Obscure Regulations
Warden condemned the enforcement action by the Gensler-led watchdog by arguing that Kraken would have avoided the fine had the exchange been a profit-taking and pass-through channel. She dismissed the counterargument by SEC that Kraken is subject to regulations governing other exchanges since it is primarily an exchange offering digital assets.
Warden regretted that the broader issue regarding crypto regulation needs more clarity. The absence of defined regulation would leave more crypto firms at the mercy of the SEC’s barrel of fines. Such eventualities will deter crypto investors from the US, thereby costing the country the innovative infrastructure.
Warden’s criticism of the absence of regulatory clarity is evident in SEC’s decision to serve Paxos Trust with the Wells Notice. The plans to charge Paxos for issuing Binance USD (BUSD) stablecoin would mirror the Kraken situation. The legal brief alerts the fintech firm that SEC plans to enforce action for dealing with and selling unregulated security.
Regulation Through Punishment
Warden regrets SEC’s decision by attributing the appetite for imposing fines on the regulation mechanism. She observed that regulation by enforcement coupled with the absence of regulatory clarity make it challenging for crypto operations to know SEC’s expectations from them,
The Alogorand Foundation executive lamented that regulatory ambiguity adversely affects the utilization of stablecoins, crypto adoption, and staking services. Warden portrayed the three as invaluable input and fundamental primitives to the crypto industry.
In reference to the recent efforts by Kraken and Coinbase, Warden is optimistic that the industry is attempting to correct the current mess. She projects that the existence of regulatory clarity at the onset of launching their products would align the crypto operations with the SEC’s expectations. Its accomplishment would save investors from the loss of funds spent in endless settlements.
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