The Securities and Exchange Commission (SEC) reached an agreement with Kraken on the actions to be taken against the exchange's chip reward program on February 9th. The Kraken paid a $30 million penalty and agreed to terminate the project.

Ironically, SEC has verified that a quality artist with a decade of reputation in the password industry is a company with a capital adequacy ratio. Kraken has been dealing with its competitor Mt. A BTC (BTC) recipient who has been subjected to a network attack. Gox more than ten years ago. It creates direct evidence of verifiable reserves using Merkle Root data. It allows customers to conduct a reasonable crowdsourcing platform financial audit by verifying the content of their accounts and the data on the chain, and conduct financial audits on the asset side of financial statements.

Although Rob Bankman-Fried urged customers to keep tokens on FTX for obvious reasons, Kraken founder Jesse Jerome has always been a "not your key, not your coin." In addition, SEC fell asleep on FTX, Terra and Three Arrow Capital. This week, SEC acted like a policeman, stopping a mother of a traveling football team after a series of robberies and throwing books at her, asking him to take aggressive action against crimes.

In this case, we should put aside other political hypocrisy, such as politicians reprimanding the work unit proof (PoW) blockchain technology, but now trying to ban betting on risk confirmation (POS) blockchain technology by law. Or Kraken tried to apply for a license for very distinctive trading software to comply with the relevant regulations of SEC, but got a reply from customers.

SEC notes that Kraken's bet plan is escrow, bringing investors' assets together. Some people on Twitter were quick to comment that this would actually be good news for Crypto. "Hey, it sounds like Gamo Gensler, the current chairman of SEC, is imitating our own life motto,'it's not your key, it's not your coin.' That just represents betting on deeper blockchain technology on the POS blockchain.

Not that fast. Lido and Rocket Pool are breakthrough alternatives to centralized chip-for-chips programs, but they also bring tokens together. Because 32 Ether (ETH) (about $50000) has a minimum shareholding ratio, combination is indispensable for most retail investors. SEC's audit response to Kraken will eventually be used in such an agreement. SEC is adept at distorting the definition of security in policies and regulations to include all sorts of crazy things, from marketing chinchillas to online gambling to orange forests. If the founder's group polarization is not enough, SEC will eventually use its desktop for more fragmented betting agreements.

If you think Gensler believes in the Seyphunk philosophy behind this famous saying, you are wrong. Its motto is "not a key, not a coin." The change made clear by the SEC last year to strictly regulate highly featured trading software-which will drive real estate developers who write blockchain smart contract codes to register as trading centres-shows that his view of decentralized finance (Defi) is better than anything else, because it is impossible.

From a model of financial regulators and the White House, it is increasingly clear that the implication of the country's policy on passwords is that it needs to be erased. The White House has boycotted work unit certification; the Securities and Exchange Commission has cracked down on interest confirmation authorizations, and banking regulators are using intriguing verification tools to encourage financial institutions to refuse access to bank accounts by people with "data encryption" in their names, even if problematic customers do not actually have data encryption.

Naturally, if your work unit certification chain will operate with a high degree of safety, reasonable or equal under the risk verification system, you will be able to connect like Etherum. But don't turn to risk confirmation out of some kind of expectation, because it's not easy to protect you from regulatory or political risks.

As a securities law expert professor, I can wear my parsing sunshade and find that some aspect of Kraken's bet reward program increases what is known as securities risk, especially some advertising. However, this does not mean that the plan should be completed, or that there is no reason to punish such attributes in the absence of fraud or investor infringement.

In turn, a set of rules should be drawn up for escrow intermediaries that give such unusual financial wealth management products, as SEC has done with asset-backed bills, real estate investment trusts and equity funds, oil business owners' partnerships, and so on. There are more securities lawyers working in the password industry, and if they have the opportunity, they will help SEC develop a rule guide today. They can do this through SEC posting messages asking for password controls, as I urged Gensler to do when I suggested him. The challenge of the penalty by Hester Pierce of the SEC committee also called for a set of effective rules.

Until it is realized here, the only regret of the password is the constant test of laws and regulations on the abuse of power by the executive branch and the builders of the agreement, and this exploration will be faithful to Timothy May's password punk philosophy.

J W Virete is an associate professor at the George Mason Law School. He is a practicing crypto forensic accountant and also practices securities law at Lawrence Law LLC. He is a member of the Financial Accounting Standards Board’s Advisory Council and a former member of the SEC Investor Advisory Committee. He also leads the Crypto Freedom Lab, a think tank fighting for policy change to preserve freedom and privacy for crypto developers and users.