SEC Commissioner Peirce Disagree With The SEC's Assertion

SEC Commissioner yesterday issued a public dissent to her agency’s enforcement action against crypto exchange Kraken.
She wrote in a statement that she does not agree with the SEC’s assertion that the shutdown of Kraken’s staking program was a “win for investors.”

SEC Commissioner Hester M. Peirce added in her statement that the current regulatory environment made it impossible for crypto related offerings to even gain approval. Her dissent comes as Securities and Exchange Commision (SEC) Chair Gary Gensler continues to crack down on crypto-related offerings and companies.

Peirce’s statement highlights

Peirce publicly rebuked SEC’s crypto enforcement, and called it “paternalistic and lazy.” She also asked if a “hostile” regulator is the best solution for the industry. It must be noted that she was appointed as Commissioner by President Donald Trump in 2018.

Notably, the SEC action against the crypto exchange Kraken was settled without an admission or denial of wrongdoing. The SEC alleged that Kraken engaged in the unregistered offer and sale of securities via its crypto lending platform. While Peirce added that’s not the primary issue.

According to Peirce, Kraken was operating a service through which its customers could offer their tokens up for staking. While the customers earned returns, and Kraken earned a fee. “The Commission argues that this staking program should have been registered with the SEC as a securities offering.”

Additionally, in the current climate crypto-related offerings are not making it through the SEC’s registration pipeline. Peirce also added that “the staking service at issue here raises a host 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.”

SEC Commissioner further mentioned “Instead of taking the path of thinking through staking programs and issuing guidance, we again chose to speak through an enforcement action, purporting to “make clear to the marketplace that staking-as-a-service providers must register and provide full, fair, and truthful disclosure and investor protection.” Using enforcement actions to tell people what the law is in an emerging industry is not an efficient or fair way of regulating. Moreover, staking services are not uniform, so one-off enforcement actions and cookie-cutter analysis does not cut it.”

Peirce also noted “the concern as their solution to a registration violation is to shut down entirely a program that has served people well. While the program will no longer be available in the United States, and Kraken is enjoined from ever offering a staking service in the U.S., registered or not.”

The SEC Commissioner ended her statement by saying “more transparency around crypto-staking programs like Kraken’s might well be a good thing. Although, whether we need a uniform regulatory solution and if that regulatory solution is best provided by a regulator that is hostile to crypto, in the form of an enforcement action, is less clear.”

Andrew is a blockchain developer who developed his interest in cryptocurrencies while his post-graduation. He is a keen observer of details and shares his passion for writing along with being a developer. His backend knowledge about blockchain helps him give a unique perspective to his writing