Feb 11, 2023
SEC Commissioner Blasts Agency for Shutting Down Kraken’s Crypto Staking Program
The United States Securities and Exchange Commission (SEC) has come under fire from its own commissioner, Hester Peirce, for its decision to shut down crypto exchange Kraken’s crypto staking program in the United States.
In a statement released on February 9th, titled “Kraken Down”, Commissioner Peirce blasted the regulator for its heavy-handed approach to regulation in the emerging industry, arguing that “regulation by enforcement is not an efficient or fair way of regulating”. She went on to suggest that the SEC should have initiated a public process to develop a workable registration process that provides valuable information to investors.
Coinbase CEO and co-founder Brian Armstrong agreed with Peirce’s comments, noting that there is no clear path to registration for businesses looking to offer staking services. He went on to suggest that if the SEC were to get rid of crypto staking in the U.S. for retail customers, it would further drive crypto businesses offshore.
The SEC announced on February 9th that it had reached a $30 million settlement with Kraken, saying it failed “to register the offer and sale of their crypto asset staking-as-a-service program”. Kraken responded in a blog post, stating that it would still offer staking services to non-U.S. customers through a subsidiary, but the firm is now permanently banned from providing staking services to U.S. residents, even if they sought to register it with the regulator.
Commissioner Peirce, affectionately known as the SEC’s “Crypto Mom” for her advocacy for the industry, has previously proposed a “safe harbor” for token projects which are looking to build decentralized networks. Her updated version of the proposal was released on April 13, 2021.
The SEC’s decision to shut down Kraken’s staking program has sparked a debate about the future of crypto staking in the United States, and the need for a more workable registration process that provides valuable information to investors. With Commissioner Peirce’s continued advocacy for the industry, it will be interesting to see what changes the SEC makes in the future.
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