Crypto Mom: Gensler’s Attack on Kraken is Paternalistic and Lazy
• The SEC recently issued an enforcement action against Kraken’s staking service.
• Hester Peirce, the SEC Commissioner commonly known as ‘Crypto Mom’, argued that the enforcement was neither “efficient nor fair” and that crypto-related offerings are not making it through the SEC’s registration pipeline.
• Coinbase CEO Brian Armstrong stated that his exchange – which offers a similar product – was given “no way to register”.
SEC’s Crackdown on Kraken’s Staking Service
The Securities and Exchange Commission (SEC) recently issued an enforcement action against Kraken’s staking service for retail customers. The action has been met with criticism from Hester Peirce, one of the agency’s members commonly referred to as ‘Crypto Mom’, who believes that exchanges were never given a realistic pathway to registration in the first place.
Paternalistic & Lazy Enforcement
Peirce released a statement arguing that the SEC’s enforcement action is neither “efficient nor fair”, raising fundamental questions regarding whether such registration was ever possible. She further claimed that in today’s climate, crypto-related offerings are simply not able to make it through the regulatory pipeline due to lack of clarity surrounding disclosure requirements and accounting quirks such as whether staking programs should be registered on a token-by-token basis or as a whole.
Coinbase Backs Up Crypto Mom
Coinbase Chief Executive Officer Brian Armstrong also backed up Peirce’s claims, asserting that his exchange – which offers a similar product – was provided no way to register with the SEC and thus their offer was misleading. Armstrong noted how both Coinbase and Kraken had invested significant resources into complying with regulations but were denied approval by the agency in spite of their efforts.
What is Staking?
Staking services let customers pool their assets together into giant staking nodes which validates transactions on cryptocurrency networks like Ethereum 2.0 in return for rewards earned by stakeholders over time in accordance with network rules. This effectively allows users to earn passive income while simultaneously supporting cryptocurrency networks they participate in without having to purchase expensive mining hardware or go through complicated technical setups themselves.
“Efficient & Fair” Regulatory Framework Needed
In order for these services to become available for consumers, Peirce believes an “efficient and fair regulatory framework” must be created so exchanges can receive clear guidance from regulators when seeking an approval procedure for offering these products rather than face sudden enforcement actions without prior warning or guidelines being provided beforehand.