Crypto Mom Slams SEC Attack on Kraken: Paternalistic and Lazy

• The SEC recently cracked down on Kraken’s staking service, prompting Crypto Mom Hester Peirce to issue a statement against the agency’s decision.
• According to Peirce, the fundamental question is not whether Kraken should have been registered with the SEC, but whether such registration was at all possible.
• Coinbase CEO Brian Armstrong also weighed in, claiming that his exchange was given “no way to register” and that the SEC’s offer was “disingenuous.”

SEC Crackdown on Kraken Staking Service

The Securities and Exchange Commission (SEC) recently initiated enforcement action against Kraken’s staking service. This prompted one of its members, Hester Peirce – otherwise known as ‘Crypto Mom’ – to issue a statement railing against her agency’s decision.

Peirce Questions Efficiency and Fairness

In her statement, Peirce argued that the SEC’s enforcement action is neither “efficient nor fair,” and that exchanges were never given a realistic pathway to registration in the first place. She further explained that crypto-related offerings are not making it through the SEC’s registration pipeline due to questions around specific disclosures, accounting quirks, and whether to register the staking program on a whole or token-by-token basis.

Brian Armstrong Weighs In

Coinbase CEO Brian Armstrong quickly backed up Commissioner Peirce’s claims by stating that his exchange – which offers a similar product – was given “no way to register” and that the SEC’s “offer” was “disingenuous.” He then went on to explain what staking services do for customers by pooling their assets together into giant nodes for validating blockchain transactions.

What Is Staking?

Staking services allow customers to put up their cryptocurrency assets as collateral in order to validate blockchain transactions. This earns them rewards over time while also helping secure blockchains from malicious actors trying to reverse or double spend coins. As such, they provide an important security feature while allowing users to earn passive income off of their holdings without having to trade them outright.

“Paternalistic” Enforcement Action Criticized

In response to this crackdown on Kraken’s staking service, Peirce criticized what she called an “overly paternalistic approach” taken by her agency towards crypto businesses who are attempting compliance with existing regulations. She concluded her statement by calling for more clarity from regulators when it comes questions around securities laws compliance in this space going forward.