The Commissioner of the United States Securities and Exchange Commission (SEC), Hester Pierce, has expressed her disagreement with the shutdown of the crypto staking program of the crypto exchange Kraken by her own agency. In a statement titled “Kraken Down,” Pierce criticized the regulator for using enforcement actions to control the emerging crypto industry and deemed it as an inefficient and unfair method of regulation. She stated that the regulator’s approach was “lazy and paternalistic.”
Pierce went on to suggest that the SEC should have taken a more transparent and public approach in developing a registration process that provides information to investors. This view was echoed by the CEO of Coinbase, Brian Armstrong, who described the offer to register staking services as “disingenuous” due to the lack of a clear registration path.
The SEO of Coinbase Brian Armstrong also spoke out:
Staking can be seen as a problem by some regulators, such as the U.S. Securities and Exchange Commission (SEC) because it involves holding onto cryptocurrencies as collateral in order to participate in the validation of transactions and earn rewards. This can be seen as a form of investment or securities offerings subject to federal securities laws and regulations.
The SEC has taken the stance that staking services offered by companies such as Kraken and Coinbase, if not correctly registered, could be considered unregistered securities offerings, which would be in violation of federal securities laws.
This has led to regulatory action against such companies and the shutdown of their staking services in the U.S. However, some, such as Commissioner Hester Pierce, have criticized this approach and argued that it is not an efficient or fair way to regulate an emerging industry like cryptocurrency.
The shutdown of Kraken’s staking program resulted in a $30 million settlement with the SEC, which accused the firm of failing to register the sale of its staking-as-a-service program. While Kraken is banned from providing staking services to U.S residents, it can still offer these services to non-U.S customers through a subsidiary.
Pierce, known as the “Crypto Mom,” has been a vocal supporter of the crypto industry during her time at the SEC. She has previously proposed a “safe harbor” for token projects to build decentralized networks, which would receive a three-year grace period exempt from SEC legal action.
This article was written by Edward founder of BlockDesk. Follow him here: