Charles Hoskinson Says Cardano Ecosystem Is Fine After SEC Bans Kraken US Staking Service – But There’s a Catch
Cardano (ADA) co-founder Charles Hoskinson says ADA remains on solid footing despite the U.S. Securities and Exchange Commission’s (SEC) crackdown on Kraken’s crypto-staking services.
In a new Youtube video, Hoskinson says the fact the SEC charged Kraken for violating securities laws for its staking services will force a larger national discussion about the issue.
Kraken settled the matter by paying a $30 million fine and removing staking from its platform.
But Hoskinson says it does not appear the SEC is deeming blockchain projects like ADA as securities just because there is staking involved but instead targeted Kraken for the way the platform had structured its staking services for clients.
“Obviously there’s going to be a national discussion now about these things, especially now that Kraken and others are getting involved. It does not appear that there’s any attempt to say ‘oh well, staking mechanics somehow now make the underlying asset a security.’ You’ll probably see a lot of FUD [fear, uncertainty and doubt] over Twitter, Reddit and other places saying ‘oh well, if staking is a security that must mean the underlying asset is. So Ether is now a security. Or ADA is now a security.’
Let’s be very clear: You can take wheat, which is a commodity, or gold, a commodity, and put it into some sort of package or structuring where that package is a security or that activity that you’re doing with it is regulated. But that doesn’t make wheat or gold a security. So you don’t have that transitivity there where what you do with stake pools could infer the underlying asset has a problem. We haven’t seen any attempt to do that at the moment.”
However, Hoskinson acknowledges there is a degree of unpredictability when it comes to the next moves by the government in regulating the crypto sector. He also expresses concern that if the government moves to increase staking regulations it may fail to draw distinctions among the different crypto staking models such as between ADA’s model and Ethereum’s (ETH).
“Now, obviously, again governments are unpredictable, facts and circumstances could change and we see things the same time you guys do so we’ll cross that bridge if it comes. But as it stands right now, the ecosystem is fine. So I don’t think there’s any issue with Cardano as it sits. I don’t think there’s any issue with our staking model as it sits. Unfortunately, conflation of what Ethereum is doing with Cardano may drag us in an uncomfortable direction.”
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