Hester Peirce, an SEC commissioner, is very upset about the agency’s decision to go after the cryptocurrency exchange Kraken and force it to stop its staking program and pay a $30 million fine.
In an official letter of dissent, Peirce says that the SEC’s repeated attempts to regulate the industry through enforcement hurt the average American investor.
“Today, the SEC shut down Kraken’s staking program and counted it as a win for investors. I disagree and therefore dissent…
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.’
[1] Using enforcement actions to tell people what the law is in an emerging industry is not an efficient or fair way of regulating. [2] Moreover, staking services are not uniform, so one-off enforcement actions and cookie-cutter analysis does not cut it.”
Instead of defining regulations, accusing firms in a new industry of misbehavior, going to court, and forcing settlements is lazy and oppressive, according to Peirce.
“Most concerning, though, is that our solution to a registration violation is to shut down entirely a program that has served people well. 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.”
Even though Peirce is open to more corporate transparency, it’s now clear that the SEC doesn’t like the crypto industry as a whole.
“More transparency around crypto-staking programs like Kraken’s might well be a good thing. However, 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.”
