• SEC Chair Gary Gensler discussed staking rules and their importance for protecting investor funds during a recent video.
• Gensler said that investors should be wary of centralized services as they may not be truly staking deposited assets or providing fair returns.
• SEC Commissioner Hester Peirce expressed concerns that the SEC’s regulations could amount to a de facto ban on staking services.
SEC Chair Discusses Staking Rules
Gary Gensler, chair of the U.S. Securities and Exchange Commission, discussed new restrictions on staking in a video on Feb. 9th. He emphasized the need to protect investor funds by ensuring that companies comply with securities laws via disclosures regarding their staking programs, products, and services. These include earn, reward, and APY programs offered by exchanges and other companies.
Protecting Investor Funds
Gensler warned investors about being cautious when depositing funds on centralized exchanges due to the risk of restricted access to one’s funds. He stated that similar concerns should also extend to staking services as some may lend out deposited assets or co-mingle them with other businesses while failing to provide fair returns or diluting an investor’s existing holdings value.
Lack of Proper Disclosure
The regulatory leader noted that there is currently no way for investors to find answers to these questions due to a lack of proper disclosure from crypto companies and services offering staking products and programs. This is why the SEC wants companies to comply with securities laws in order to benefit investors and ensure their protection.
Possible De Facto Ban?
SEC Commissioner Hester Peirce raised concerns about a possible de facto ban on staking services due to unclear regulations imposed by the SEC after Kraken announced it was shutting down its U.S.-based service as part of an SEC settlement agreement. She questioned whether such applications would even make it through the registration process at all given these conditions.
While Gensler suggested that crypto companies can still comply with regulations, there are still serious doubts about what this will mean for existing providers who have been operating in good faith until now but may not be able meet all required standards going forward..