U.S. SEC Commissioner Hester Pierce has openly criticized her own agency for shutting down the crypto staking program of crypto exchange Kraken in the United States.
Peirce claimed that the regulator was "lazy and paternalistic" and said that the SEC should have launched a "public process to develop a workable registration process that provides valuable information to investors."
The commissioner criticized her agency in a statement titled "Kraken Down," stating that regulation by enforcement "is not an efficient or fair way of regulating" an emerging industry.
"Today, the SEC shut down Kraken's staking program and counted it as a win for investors," Pierce wrote. "I disagree and therefore dissent."
Peirce's statement also slammed the regulator for shutting down a "program that has served people well."
"Using enforcement actions to tell people what the law is in an emerging industry is not an efficient or fair way of regulating. Moreover, staking services are not uniform, so one-off enforcement actions and cookie-cutter analysis does not cut it," she added.
As there is no obvious method to registration, Coinbase CEO and co-founder Brian Armstrong concurred with Peirce that requiring firms to register its staking services is a "disingenuous offer."
Armstrong stated earlier this week that he had heard "rumors that the SEC would like to get rid of crypto staking in the U.S. for retail customers," and that "it would be a terrible path for the U.S." as it would further push crypto businesses offshore.
During her tenure at the regulator, Peirce, often known as the SEC's "Crypto Mom," has been a staunch advocate for the crypto industry.
Peirce has previously advocated a "safe harbor" for token initiatives aiming to establish decentralized networks, in which network creators would be protected from SEC legal action for a three-year grace period. On April 13, 2021, she released an updated version of her plan.
Coinbase is currently the target of an SEC investigation comparable to the one that led to the Kraken settlement, which it disclosed in an SEC filing on August 9 was also related to its staking services.
The SEC stated on February 9 that it had achieved a $30 million settlement with Kraken for failing to register the offer and sale of its cryptocurrency asset staking-as-a-service program.
Kraken stated in a blog post that it would continue to offer staking services to non-U.S. customers through a subsidiary. However, according to the SEC's announcement, the company is permanently prohibited from providing staking services to U.S. residents, even if they attempted to register it with the regulator.
