Commissioner Peirce breaks with SEC over Kraken enforcement

Commissioner Peirce published a statement on Thursday explaining her opposition to the SEC’s shutting down of Kraken’s staking program.

Longest serving commissioner

Hester Peirce is one of the current 4 SEC commissioners under the chairmanship of Gary Gensler. She is the longest serving commissioner, having started her term in 2018. Since then commissioner Peirce has always defended her right to maintain her own views, which have often been opposed to those of the commission.

On Thursday she published her thoughts and dissent on the SEC website on the subject of the SEC’s recent enforcement action targeted at crypto exchange Kraken. In the statement she was not hesitant in calling out her agency for being, in her view, “hostile to crypto”.

Peirce’s argument

Peirce’s argument was that Kraken had received the enforcement action against it because its staking program should have been registered with the SEC as a securities offering.

She said that she wasn’t contending that the staking program was or wasn’t a security. She said that given the current environment for crypto at the SEC, actually getting the staking program registered through the SEC’s pipeline would have been extremely difficult.

She accused the SEC of not thinking through the implications for staking programs in order to put out guidance, and instead it had just chosen the route of enforcement action.

Lazy and paternalistic

It is for this that the commissioner called her own agency “lazy and paternalistic”, saying that there was no attempt to develop a public process that could provide “workable registration” and offer “valuable information to investors”.

Peirce stated:

”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.”

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