In a recent statement on social media, Kraken co-founder Jesse Powell raised concerns about the Securities and Exchange Commission’s (SEC) approach to regulating the cryptocurrency industry. Powell suggested that the SEC prioritizes cases based on convenience, targeting U.S.-based companies like Coinbase, Ripple, and Kraken, while overlooking more egregious offenders operating offshore.
No good deed goes unpunished. SEC is clearly bringing cases in order of convenience. @krakenfx, @coinbase, @Ripple are all easy targets, sitting right in their back yard. Going after the most egregious offenders offshore would require effort. It's not about protecting people.— Jesse Powell (@jespow) November 23, 2023
Powell’s comments come in response to the SEC’s recent enforcement actions against several U.S. crypto firms, including Poloniex and Gemini. The SEC has alleged that these companies violated federal securities laws by offering unregistered securities and failing to comply with anti-money laundering (AML) regulations.
While the SEC’s actions have been welcomed by some who believe they will help protect investors, Powell argues that they have had a chilling effect on the industry, leading some firms to shut down or move operations abroad.
Powell believes that the SEC’s focus on U.S.-based companies is misguided, as it allows offshore companies to operate without fear of regulatory scrutiny. He argues that the SEC should instead prioritize enforcing the law against all companies, regardless of their location.
“Going after the most egregious offenders offshore would require effort,” Powell wrote. “It’s not about protecting people.”
Powell’s concerns about the SEC’s enforcement priorities are shared by other industry stakeholders. Many believe that the regulation-by-enforcement approach is counterproductive and could ultimately drive innovation out of the United States.
The SEC has not yet responded to Powell’s comments. However, the agency has stated that it is committed to protecting investors and ensuring that the cryptocurrency industry operates in a fair and transparent manner.
The debate over the SEC’s approach to regulating cryptocurrency is likely to continue in the coming months. As the industry continues to grow, it is important that regulators find a way to balance the need for consumer protection with the need to foster innovation.