SEC chairman warned cryptocurrency exchanges about steaking

SEC chairman warned cryptocurrency exchanges about steaking

Author: Robert Strickland

SEC chairman warned cryptocurrency exchanges about steaking

U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler warned cryptocurrency trading platform executives to "take note" of Kraken's decision to suspend its stacking service in the United States.

"Companies like Kraken may offer investment contracts and schemes, but they must disclose full, honest and truthful information about their programs. This puts investors who are exploring financial prospects in a better position. Getting to that point is a major goal of the SEC," Gensler said during Friday's appearance on CNBC's Squawk Box.

When asked by show host Andrew Ross Sorkin whether enforcement could be applied to other income programs, Gensler answered in the affirmative. He stressed that Coinbase's Earn crypto-exchange service, whether it's called "credit," "income" or "earnings," must explain the specifics of the economy and follow all the rules.

Gensler emphasized that if someone takes digital tokens and transfers them to that platform, it is the platform that controls them, not the user. He suggested reflecting on what happens if a company goes bankrupt. He cited the Celsius Network case as an example.

In January 2023, a U.S. bankruptcy judge ruled that any cryptocurrency deposited into the Earn service belonged to the firm, not the customers. The head of the SEC said that other cryptocurrency platforms should take note of this information and seek to ensure compliance, properly disclose information, record transactions and comply with other rules.

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