Chairman Gary Gensler Says SEC Is ‘Neutral’, Calls Staking an ‘Important Innovation’

In its most recent move against the cryptocurrency sector,  the Securities and Exchange Commission fined exchange Kraken $30 million for its staking service. The action is making cryptocurrency firms nervous that there might be more to come. Gensler admitted that just a few coins have registered intermediaries but raised concern about the conflicts in their business models.

Gary Gensler, the chairman of SEC, has replied to claims that he is making it harder for the crypto industry to become widely accepted. During an interview with CNBC’s Squawk Box show, Gensler said that while offering cryptocurrency services like loans and staking, crypto intermediaries must give the correct disclosures and security measures mandated by their securities laws.

“Whether it’s through staking-as-a-service, lending, or other means, crypto intermediaries, when offering investment contracts in exchange for investors’ tokens, need to provide the proper disclosures and safeguards required by our securities laws,” he said. 

However, he also added that staking is a ‘really important innovation in the cryptocurrency sector. “It allows users to participate directly in running open crypto networks. Staking brings many positive improvements to the space, including scalability, increased security, and reduced carbon footprints,” he added. 

One of the biggest cryptocurrency exchanges, Kraken, was accused of violating regulations by offering and selling its staking-as-a-service programme, which allows users to use their own cryptocurrency assets on the site in exchange for a yearly investment return.

In answer to CNBC’s Andrew Ross Sorkin’s question about whether Gensler was concerned that this would encourage investors to stake their bitcoin abroad, Gensler stated that the SEC is technology neutral as long as the technology is registered.

“Using enforcement actions to tell the public what is the law is not an efficient or appropriate method of regulation in a nascent industry. Furthermore, staking services are not uniform, so one-off enforcement actions and cookie-cutter analysis in this Let’s not cut it. A patriarchal and lazy regulator settles on a solution like this compromise,” the chairman said.