key takeaways
- The SEC is forcing Kraken to shut down its staking services in the United States, alleging that the platform failed to properly register the program.
- SEC Commissioner Hester Peirce disagrees with the decision.
- He argued that Kraken would not have been able to register its products with the SEC even if it had wanted to.
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SEC Chairman Gary Gensler’s latest move, to force Kraken to shut down its staking services, is drawing 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 Pierce published a letter yesterday criticizing the Securities and Exchange Commission’s decision to shut down the cryptocurrency exchange’s staking products. The American regulator had announced earlier that day it had reached a settlement with Kraken in which the company agreed to suspend its staking services in the US (and pay a $30 million fine) for failing to properly register the program.
Peirce argued that Kraken would not have been able to register its staking products even if it had wanted to. “In the current climate, cryptocurrency-related offerings fail to get through the SEC filing channel,” he stated, alluding to the trouble cryptocurrency companies have had in obtaining clear regulatory frameworks from the SEC.
“We have known about cryptocurrency staking programs for a long time,” he wrote. “Instead of taking the path of thinking through reframing programs and issuing guidance, we again chose to speak through enforcement action.” SEC Chairman Gary Gensler has been criticized numerous times by industry leaders and lawmakers for his “regulation by enforcement” approach, with Congressman Tom Emmer going as far as to call is a strategy to “jam [crypto companies] in a rape.”
Peirce also claimed that the deal did little to bring more clarity to other staking-as-a-service providers, as the same product posed a “plenty of tricky issues.” [regulatory] questions.” He added that many companies have adopted different business models. “Staking services are not uniform, so single enforcement actions and cookie-cutter analysis are not [sic] don’t cut it,” he wrote, before describing the SEC’s approach as “paternalistic and lazy.”
Disclaimer: At the time of writing, the author of this article owned BTC, ETH, and various other crypto assets.
