PHILADELPHIA — The U.S. Securities and Exchange Commission did not attempt to consult with the crypto industry before launching this week’s unregistered securities crackdown on staking-as-a-service, Commissioner Hester Peirce said Friday.
Speaking at a student conference at the University of Pennsylvania, Peirce said the top U.S. investments regulator’s lawsuit against Kraken crypto exchange was the latest example of regulation-by-enforcement in the digital assets space. On Thursday, Kraken paid $30 million and shut down its U.S. staking business after the SEC alleged it was violating federal securities law.
“We had not tried to sit down with people in the industry” to discuss staking, the process by which crypto holders delegate their tokens to validators in order to earn crypto rewards, Peirce said. She said the SEC has known about staking for a long time, and its decision to strike now was “arbitrary,” as was its targeting of Kraken’s staking business first.
"Yesterday’s decision basically said, ‘Let’s just shut it down.’ That can’t be the answer," the commissioner said.
Peirce's comments raise the prospect of SEC’s battle against Kraken’s staking turning into a wider war. Kraken is hardly the only U.S. entity that runs a staking business for U.S. customers. Publicly traded company Coinbase (COIN) also offers staking, and it has said that business remains online.
She took particular umbrage at the restrictive terms of Kraken’s settlement. It has vowed to never relaunch its staking business for U.S. customers, she said, meaning it can not even go through the motions of operating above board, in the SEC’s view, if it wanted to.
The SEC has taken an aggressive approach to oversight of the crypto industry under Chair Gary Gensler. Peirce has been a noted dissenter of the agency’s handling of the crypto space for years.
CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk offers all employees above a certain salary threshold, including journalists, stock options in the Bullish group as part of their compensation.