Summary:
- SEC Commissioner Hester Pierce disagreed with the regulator’s move to shut down Kraken’s staking service.
- Pierce noted that the decision was not a fair way of regulating the crypto industry and that digital asset staking models differ.
- Kraken was ordered to shut down its staking service for U.S. customers in addition to a $30 million fine for not registering its offering with the commission.
- The news emerged shortly after Coinbase CEO Brian Armstrong pointed to rumors about Gary Gensler’s watchdog cracking down on staking providers.
SEC Commissioner Hester Pierce dissented from the regulator’s decision to fine crypto exchange Kraken $30 million and order the platform to cease its staking offering in the United States.
Pierce who is referred to as “Crypto Mom” by digital asset proponents, argued that the move from the Securities and Exchange Commission does not represent “an efficient or fair way of regulating” the crypto industry.
On Thursday, the Commission said that Kraken failed to register its “staking-as-a-service” or SaaS offering. The enforcement action taken against Kraken means that the platform must shut down its service for U.S. customers. Kraken was also enjoined from ever providing staking facilities on U.S. soil, whether registered or otherwise.
Pierce who disagreed with the decision noted that “one-off enforcement actions and cookie-cutter analysis does not cut it” as staking services do not always adopt the same model.
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.
SEC Raises Stakes For Crypto Companies
The decision from the SEC came hours after Coinbase CEO Brian Armstrong noted rumors about the commission’s plan to hunt down staking service providers catering to U.S. retail customers.
1/ We’re hearing rumors that the SEC would like to get rid of crypto staking in the U.S. for retail customers. I hope that’s not the case as I believe it would be a terrible path for the U.S. if that was allowed to happen.
— Brian Armstrong (@brian_armstrong) February 8, 2023
It’s unclear how the Kraken precedent now set by the SEC will affect other crypto companies like Coinbase which provide staking services for U.S. users. The move also reinforces a pattern from Gary Gensler’s watchdog which has opted for crackdowns and enforcement actions against crypto entities rather than clarifying the policies meant to streamline the burgeoning digital asset industry.
Earlier in January, the regulator slammed charges against Gemini and Genesis for unregistered securities sales via the Gemini Earn product.
