The Chamber of Digital Commerce has submitted a motion for leave to file an amicus curiae brief in the ongoing SEC v. Payward, Inc. (Kraken) case. This move underscores the Chamber’s commitment to advocating for clear and fair regulatory frameworks that support the growth and innovation of blockchain technology.

At the heart of this legal battle lies the SEC’s approach to digital assets, which the Chamber’s Brief argues is fundamentally flawed. The SEC’s efforts to classify all digital asset transactions as securities transactions not only misinterprets the law but also poses a grave threat to the future of blockchain technology. The Chamber firmly believes that digital assets, by their nature, are not inherently “investment contracts” and should not be blanketly regulated as such.

The implications of the SEC’s aggressive enforcement stance towards digital asset companies like Kraken are far-reaching. Should the SEC’s interpretation prevail, it could have a chilling effect on the trillion-dollar digital asset space, potentially stifling innovation and hindering the development of the U.S. economy in this critical sector.

Leading the charge on the amicus brief were Jaime Bartlett, Partner, Lilya Tessler, Partner and head of the FinTech and Blockchain Group, and David Goldenberg, Senior Managing Associate, all from Sidley Austin LLP. Their expertise and dedication have been instrumental in articulating the Chamber’s position and advocating for a more nuanced understanding of digital assets. The Chamber also extends its gratitude to the members of the Token Alliance who have contributed to this effort. Their insights and support have been invaluable in shaping the arguments presented in the brief.

As this case progresses, the Chamber of Digital Commerce remains steadfast in its mission to promote the adoption and advancement of blockchain technology. We believe that with the right regulatory environment, digital assets can continue to flourish, driving innovation and prosperity in the U.S. economy. For a history of the Chamber’s pushback against the SEC’s overreach of digital assets, read previous amicus briefs here:

SEC v. Kraken Timeline

  • February 9, 2023: The U.S. Securities and Exchange Commission (SEC) announced charges against Payward Ventures, Inc. and Payward Trading Ltd. (collectively, Kraken) for failing “to register the offer and sale of their crypto asset staking-as-a-service program.” To settle the SEC’s charges, Kraken agreed to immediately cease offering or selling securities through crypto asset staking services or staking programs and pay $30 million in disgorgement, prejudgment interest, and civil penalties.
  • November 20, 2023: The SEC charged Kraken with operating Kraken’s crypto trading platform as an unregistered securities exchange, broker, dealer, and clearing agency. The SEC’s complaint also alleged that Kraken commingles its customers’ money with its own, including paying operational expenses directly from accounts that hold customer cash and commingles its customers’ crypto assets with its own.
  • February 22, 2024: Kraken filed a Motion to Dismiss the SEC’s suit. Kraken’s Motion stated that “the SEC does not allege fraud. The SEC does not allege consumer harm. The SEC’s sole claims are that Kraken has somehow operated in plain sight for almost a decade as an unregistered securities exchange, broker-dealer, and clearing agency, in violation of the Exchange Act.” Kraken also states the SEC did not “plausibly allege” any of the cryptocurrencies listed in its complaint are securities or investment contracts and the SEC did not meet the requirements set out by the Howey Test.