Kraken Settles SEC Charge That Its SAAS Model Was an Illegal Securities Offering | Foley & Lardner LLP

In addition to recent settlements involving crypto asset lenders, the Kraken settlement is an example of the SEC pursuing enforcement actions against “centralized crypto companies” and claiming that existing securities laws apply to crypto-related financial products. Following the Kraken settlement, SEC Chair Gary Gensler gave an interview on CNBC in which he asserted that the settlement “should put everyone on notice in this marketplace.” He also released a YouTube video stating “[W]hether they call their services ‘lending,’ ‘earn,’ ‘APY’ or ‘staking,’ that relationship should come with the protections of federal securities laws.”

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In his CNBC interview, Chair Gensler said that SAAS providers must make full disclosure to the investing public. He has never explained, however, how the SEC will enable that disclosure to occur. The SEC has permitted only a couple of crypto asset products to be registered under the securities laws — and none of them involved loan products or SAAS — and those offerings happened before Mr. Gensler was installed to lead the SEC. The crypto industry is left being told that it must register and make disclosure while being afforded no realistic opportunity to register. Small wonder, then, that so much of the industry has migrated off-shore. A solution is needed in Washington, D.C. to keep the technology and the talent here at home.

Source: Kraken Settles SEC Charge That Its SAAS Model Was an Illegal Securities Offering | Blogs | Innovative Technology Insights | Foley & Lardner LLP