SEC Commissioner Hester Peirce, known to the community as Crypto Mom, has criticized the agency for taking enforcement action against Kraken exchange and shutting down its crypto staking product following a $30 million settlement.
The United States Securities and Exchange (SEC) commissioner Hester Peirce has disagreed with the dreaded regulator over its latest enforcement action against centralized US-based exchange, Kraken, for offering crypto staking products to Americans.
On Feb. 8, reports emerged that the SEC had launched investigations into Kraken exchange for allegedly offering unregistered securities to U.S residents through its staking program. Barely 24 hours later, the exchange shuttered its staking service and reportedly reached a $30 million agreement with the regulator.
While it lasted, Kraken’s crypto staking service allowed crypto investors, including US residents, to earn up to 24% rewards on their cash and crypto holdings yearly. It will be recalled that in September 2021, the CFTC slapped Kraken with a $1.25 million penalty over an alleged illegal product offering.
Peirce says Enforcement actions are not the way to go
In her dissent letter on Feb. 9, crypto-positive commissioner Peirce argued that the agency’s termination of Kraken’s staking service for failing to come under its securities registration regime was a wrong move.
Peirce argued that the SEC’s current regulatory regime makes it almost impossible for crypto-related offerings to survive, adding that a staking service such as Kraken’s brings to light a plethora of “complicated questions, including whether the staking program as a whole would be registered or whether each token’s staking program would be separately registered, what the important disclosures would be, and what the accounting implications would be for Kraken.”
Against that backdrop, Peirce stated categorically that the right approach would have been to formulate clear-cut guidelines rather than crushing an innovative product designed to better users’ lives.
“Most concerning, though, is that our solution to a registration violation is to shut down entirely a program that has served people well.” Crypto mom further described the regulator’s enforcement approach as paternalistic and lazy, urging the regulator to formulate transparent guidelines for crypto staking programs.
So far, the SEC’s harsh stance towards crypto staking and alleged plans to ban the product in the U.S. has attracted condemnation from industry players, including Coinbase CEO Brian Armstrong, describing it as a “terrible path” to follow.
Earlier this month, U.S. Attorney John Deaton hinted that commissioner Peirce had revealed some deception on the part of her counterparts in the handling of Ripple’s XRP case.