Powell provided an explanation for why Kraken did not fight the SEC and voiced optimism for the future.
Jesse Powell, co-founder and departing CEO of Kraken, tweeted on February 9 about his company’s intention to cease U.S. staking services.
Yesterday, Kraken struck a deal with the U.S. Securities and Exchange Commission that required the company to pay $30 million and cease providing staking services to U.S. customers. As per the report, Kraken’s staking services constituted a security offering.
Today, Powell responded personally to these incidents. He wrote: “I really hope that someone shows in court that a lawful, user-friendly form of custodial staking is available to US customers…
It will be a tough, long, and costly battle… However, the industry and the United States will be very appreciative.”
Powell indicated that Kraken decided not to pursue the SEC due to “risk-adjusted return,” suggesting that an unlikely win would not justify the legal costs.
Regarding the regulation approach, Powell said, “This is incorrect, but I will not tell you how to correct it. Want to determine if X works? The ‘try it and see’ attitude is neither beneficial to the industry nor to customers.”
“Powell agreed with Congressman Tom Emmer, a prominent pro-crypto lawmaker who pushed against the SEC’s “purgatory policy.”
Powell wrote: “Congress must act to preserve the domestic crypto business and U.S. customers who will now travel abroad to receive services that are no longer offered in the United States.”
Emmer similarly warned about offshore potential linked to staking. In response to comments from NuCypher CEO MacLane Wilkison, Powell also called for an alternate staking strategy. Powell referred to demurrage-based staking as “the best approach” In this method, the value of unstaked tokens is reduced or destroyed, but staked tokens preserve their original value. It would likely be difficult for authorities to take action against this system since it does not involve the distribution of incentives.
Disclaimer: The information provided in this article is for informational purposes only and should not be construed as financial or investment advice. Cryptocurrency investments are subject to market risks, and individuals should seek professional advice before making any investment decisions.