SEC Commissioner Criticizes SEC Patriarchal And Lazy For Closing Kraken’s Staking Service

Key Points:

• SEC Commissioner Hester Peirce said she disagrees with the SEC shutting down Kraken’s services and thinks it helps investors.
• She thinks the SEC’s current approach to addressing registration violations could shut down a program that has served people well.
• Enforcement actions like the SEC’s “patriarchal and lazy” approach to regulation.

Faced with the SEC shutting down the request and paying a $30 million fine against the Kraken crypto exchange’s staking service, one SEC commissioner disagreed with the decision and how the SEC worked.

Hester Peirce, a member of the U.S. Securities and Exchange Commission (SEC) and “the mother of cryptocurrencies,” released a statement on the SEC’s official website today, saying that she reacted against the SEC’s plan to shut down Kraken.

“The Commission argues that this staking program should have been registered with the SEC as a security. Whether one agrees with that analysis or not, the more fundamental question is whether SEC registration would have been possible. In the current climate, crypto-related offerings are not making it through the SEC’s registration pipeline.”

Peirce pointed to the SEC’s argument.

“A controversial staking product like this raises a complex set of questions, including whether the staking program will be registered entirely or whether the staking program for individual tokens will be posted individually signed or not, what are the material disclosures and what are the accounting implications for Kraken.”

Peirce believes that the SEC should issue guidelines on cryptographic engagements rather than opting to rephrase through enforcement actions. Additionally, she notes that staking services are heterogeneous, so past execution actions and cookie-cutter analysis won’t solve the problem.

Peirce raised her concern that the SEC’s current approach to addressing registration violations could shut down a program that has served people well. She calls enforcement actions such as the SEC’s “patriarchal and lazy” approach to regulation.

Ultimately, Peirce thinks more transparency around crypto staking schemes like Kraken is good. Besides that, a question arises: Is a unified regulatory solution needed, and is it best provided by a crypto-hostile regulator?

As was updated in an earlier Coincu News article, the SEC announced that Kraken would “immediately” terminate its crypto staking service to U.S. customers and pay a fine of $30 million to the SEC to settle allegations that it offered unregistered securities.

SEC Chairman Gary Gensler said staking service providers must register and provide investor protections and disclosures. The law enforcement agency argues that the main goal in regulating cryptocurrencies throughout 2023 is to make cryptocurrency exchange and lending platforms compliant.

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