Blockchain, Crypto Communities Roast SEC And Gensler On Kraken Crackdown

The charges filed by the U.S. Securities and Exchange Commission (SEC) against the crypto exchange platform Kraken have angered a lot of personalities, including politicians, regulators and high-profile personalities in both blockchain and crypto spheres.

SEC's crackdown on Kraken could have a sweeping impact on the industry, particularly in the centralized crypto exchange platforms like Coinbase and Binance, which, over the years, have tried offering a wide range of products and services to expand their revenue sources.

And while many crypto critics celebrated the financial regulator's decision, several others were not pleased and even outraged.

For Blockchain Association CEO Kristin Smith, the SEC's latest move is an "attack on U.S. crypto companies and retail investors." She said that the watchdog is "regulating by enforcement and undercutting the potential of public blockchain networks in the United States."

The CEO also called on Congress to create legislation for the emerging space or risk driving away innovation.

"Today's settlement isn't law, but it is another example of why we need Congress – not regulators – to determine appropriate legislation for this new technology. Otherwise, the U.S. risks driving innovation offshore and taking online freedoms away from individual users," Smith said.

U.S. Congressman Tom Emmer, who is a known critic of SEC chairman Gary Gensler, in a tweet last week, underlined the importance of crypto staking and called the financial regulator's move a "purgatory strategy."

The lawmaker also echoed Smith's concern about driving away innovation and investors offshore.

"To be clear, staking enables more people to participate in building the next generation of the internet.@GaryGensler's regulatory purgatory strategy hurts everyday Americans the most - leaving them in the dust while these opportunities are accessible offshore," Congressman Emmer's tweet read.

The most interesting criticism came from SEC commissioner Hester Peirce, who called SEC's latest decision a "paternalistic and lazy solution" that does not "initiate a public process to develop a workable registration process that provides valuable information to investors."

Coinbase CEO Brian Armstrong, who previously expressed his opposition against the ban on crypto staking, considered the decision an "overreach" and said that the publicly traded company, which operates a cryptocurrency exchange platform would continue to "keep fighting for economic freedom" and protect its "customers from government overreach."

SkyBridge Capital founder Anthony Scaramucci called SEC's action a "political overreach" and " an attempt to stall innovation in financial services."

On Thursday, the SEC alleged that Kraken's staking service was an illegal sale of securities.

As a result, Kraken immediately ceased offering its crypto staking program to U.S customers and paid the $39 million fine in disgorgement, civil penalties and prejudgment interest.