Key Takeaways
- The SEC is forcing Kraken to shut down its staking services in the United States, claiming the platform failed to properly register the program.
- SEC Commissioner Hester Peirce disagrees with the decision.
- She argued that Kraken wouldn’t have been able to register its products with the SEC even if it had wanted to.
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SEC Chair Gary Gensler’s latest move—forcing Kraken to shut down its staking services—is being met with criticism from within the agency itself.
The SEC Is to Blame
Not everyone at the SEC is happy with the agency’s recent move against Kraken.
Commissioner Hester Peirce published a letter yesterday in which she criticized the Securities and Exchange Commission’s decision to shut down the crypto exchange’s staking products. The U.S. regulator had announced earlier in the day that it had reached a settlement with Kraken in which the company agreed to discontinue its staking services in the U.S. (and pay a $30 million fine) for failing to properly register the program.
Peirce argued that Kraken wouldn’t have been able to register its staking products even if it had wanted to. “In the current climate, crypto-related offerings are not making it through the SEC’s registration pipeline,” she stated, alluding to the trouble that crypto companies have had with getting clear regulatory frameworks from the SEC.
“We have known about crypto staking programs for a long time,” she wrote. “Instead of taking the path of thinking through staking programs and issuing guidance, we again chose to speak through an enforcement action.” SEC Chair Gary Gensler has been criticized on numerous occasions by industry leaders and lawmakers alike for his “regulation by enforcement” approach, with Congressman Tom Emmer going so far as calling it a strategy to “jam [crypto companies] into a violation.”
Peirce also claimed that the settlement did little to provide more clarity for other staking-as-a-service providers, since the very product raised a “host of complicated [regulatory] questions.” She added that many companies adopted different business models. “Staking services are not uniform, so one-off enforcement actions and cookie-cutter analysis does [sic] not cut it,” she wrote, before describing the SEC’s approach as “paternalistic and lazy.”
Disclaimer: At the time of writing, the author of this piece owned BTC, ETH, and several other crypto assets.