SEC commissioner Hester Peirce has publicly slammed her agency for being “hostile to crypto” and a “paternalistic and lazy regulator.”
The SEC recently orchestrated a $30 million settlement with Kraken over its crypto-staking program. While the agency touted it as a win for investors, not everyone was convinced, including Commissioner Peirce.
“Today, the SEC shut down Kraken’s staking program and counted it as a win for investors,” Peirce wrote. “I disagree and therefore dissent.”
Commissioner Peirce then goes on to describe Kraken’s model, which allowed crypto owners to “offer their tokens up for staking,” with both customers and company profiting. She then goes on to lament that, rather than providing guidance and guidelines for such programs, the agency went into enforcement mode, claiming Kraken’s operation should have been registered with the SEC.
As Commissioner Peirce highlights, however, “crypto-related offerings are not making it through the SEC’s registration pipeline” in the current climate. She then makes the case that it would be better for the agency to put forth clear guidelines for crypto companies rather than immediately jumping to enforcement action.
“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,’” Peirce continues. “Using enforcement actions to tell people what the law is in an emerging industry is not an efficient or fair way of regulating.”
In her most damning words of the dissent, Commission Peirce argues that Kraken’s program benefited investors and called out the SEC for shutting it down.
“Most concerning, though, is that our solution to a registration violation is to shut down entirely a program that has served people well,” she added. “The program will no longer be available in the United States, and Kraken is enjoined from ever offering a staking service in the United States, registered or not. A paternalistic and lazy regulator settles on a solution like the one in this settlement: do not initiate a public process to develop a workable registration process that provides valuable information to investors, just shut it down.”
It’s unclear if Commissioner Peirce’s dissent will have any lasting impact, especially given SEC Chair Gary Gensler’s open hostility toward crypto.