Gary Gensler, Chairman of the US Securities and Exchange Commission (SEC), tried to positively reflect the new restrictions on staking during a video on Feb. Here is what Gensler had to say about altcoins…
Gensler says disclosures will benefit altcoins
“By accepting the terms of service, you generally agree that giving your tokens to these providers may mean transferring your ownership to them,” Gensler said live on YouTube. He also pointed out that cryptocurrencies are not owned unless the wallet is the sole owner by saying “not your keys, not your crypto” which is a popular crypto expression. As we have also reported as Kriptokoin.com, many investors are cautious when depositing money in a centralized exchange and use this slogan to remind them that exchanges may restrict access to one’s funds.
Gensler said similar concerns should extend to staking programs offered by exchanges and other companies. He said investors should consider whether central services are actually staking their invested assets. Some services may lend invested assets or mix assets with other businesses. Other services may not give investors their fair share of returns or may dilute the value of the assets investors currently hold.
Gensler added that these concerns apply to staking programs and interest-earning products of any name, including earning, rewards, and APY programs. He said the lack of appropriate disclosure means that there is currently no way for investors to find answers to the above questions and concerns. He said this is why the SEC requires companies to comply with securities laws.
Concerns circulating about staking ban
While Gensler’s statements imply that crypto companies can comply with regulations, the SEC’s sudden decision to impose vague rules could mean a de facto ban. SEC commissioner Hester Peirce voiced this concern today. After Kraken announced that it would be shutting down its US staking service as part of the SEC deal, Peirce wrote that it may not be possible for Kraken to register properly. He said crypto apps “did not pass the SEC’s registration line” and that it was worrying that the SEC was shutting down a service that was “serving people well.”
On the other hand, Coinbase CEO Brian Armstrong said he had heard that the SEC wanted to “get rid of crypto staking in the US for individual customers.” Chief Legal Officer Paul Grewal told Bloomberg today that Coinbase plans to continue offering staking services, which he says are different from Kraken’s. Unconfirmed rumors also suggest that Coinbase could enter a legal battle with the SEC if it tries to interfere with the service.
These developments show that the SEC has taken a strict stance on staking. Still, the SEC can eventually create a landscape in which staking services can operate. While the SEC has not explicitly approved the implementation, current rules seem to leave room for decentralized on-chain staking on blockchains like Ethereum as well. Among the prominent altcoins in staking, Ethereum (ETH), Polkadot (DOT), Tezos (XTZ), Algorand (ALGO), PancakeSwap (CAKE), Solana (SOL), Avalanche (AVAX), SushiSwap (SUSHI), Cardano (ADA) projects such as
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