SEC Commissioner Blasts ‘Paternalistic and Lazy’ SEC

SEC Commissioner Hester Peirce lashed out at her own agency on Thursday over its decision to slap Kraken with two charges — forcing the crypto exchange to shutter its staking operations. 

Kraken settled on both SEC counts and forked over $30 million as part of the deal. Peirce said in a statement she disagreed with the outcome and was therefore dissenting.

“A paternalistic and lazy regulator settles on a solution like the one in this settlement,” she said.

The US securities regulator, led by Chair Gary Gensler, faces “a more fundamental question” around whether Kraken registering its staking offerings as securities “would have been possible” to begin with.

“We have known about crypto staking programs for a long time” Peirce said, adding that she should have personally called for rolling out staking guidance “long before now,” even though “it may not have made a difference.” 

Instead, the regulator decided to “just shut it down,” she said.  

Peirce — who has been nicknamed the “crypto mom” — has long advocated for sensible US regulation for both digital assets and their underlying technology.

The commissioner is no newcomer to vocalizing her concerns around the SEC’s crypto approach, which she has said is often overly cautious and has the potential to stifle the sector’s innovation.

Kraken’s settlement with the SEC means the exchange has now ended its on-chain staking services for US-based customers. With the exception of staked ether, staked assets currently deployed will be automatically pulled out of the program and will no longer provide rewards.

It’s still too early to determine whether the US settlement against a centralized exchange such as Kraken would translate over to decentralized finance protocols.

It’s not the first time Peirce has expressed opinions that diverge from her agency’s official stance. Last year, the commissioner chided the SEC over its decision to charge crypto lender BlockFi over its high-interest yield products for US customers.

Peirce questioned the SEC’s approach to crypto lending and asked whether it was the best way to protect customers.

“I do not think so, so I respectfully dissent.”

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