• The SEC Commissioner Hester Peirce expressed concern that the regulator did not consult with the crypto industry before enforcing charges against Kraken’s staking service.
• According to Peirce, the SEC’s decision to settle was “arbitrary” and their restriction of Kraken’s settlement terms is unacceptable.
• Peirce suggested that this case could become a wider war over the legality of staking services in the US, as other entities like Coinbase also offer such services.
SEC Did Not Consult Industry Before Staking Charges
The U.S. Securities and Exchange Commission (SEC) commissioner Hester Peirce expressed her concerns on Friday, saying that the regulator did not consult with the crypto industry before enforcing charges against Kraken’s staking service. This comes after Kraken settled with the SEC on Thursday for $30 million and shutting down its U.S. staking business after being accused of violating federal securities law.
Regulation-By-Enforcement In Crypto Space
Peirce said that this case was another example of regulation-by-enforcement in digital assets space, as the SEC had known about staking for a long time but decided to move now without consulting anyone in the industry first. She said that “we had not tried to sit down with people in the industry” and added that “yesterday’s decision basically said, ‘Let’s just shut it down.‘ That can’t be an answer.“
Kraken Settlement Terms Unacceptable
In particular, Peirce was unhappy about the restrictive terms of Kraken’s settlement which states that they will never relaunch their staking business for U.S customers again even if they go through all motions required by law to operate legally again. This raises questions about what would happen with other entities like Coinbase who also offer such services in U.S despite legal ambiguity around them right now?
Wider War Ahead?
Peirce warned that this case could become a wider war between regulators and crypto businesses offering services related to staking or DeFi protocols in general as most such activities are currently unregulated by various jurisdictions including United States at least partly due to lack of proper guidance from regulators themselves leading many companies to guess their way around laws or simply ignore them altogether till now when regulators have started taking action against them one by one recently starting out from Kraken first which has been forced into settling now but who knows may be Coinbase is next!
Ultimately, It remains too early yet to tell how this would play out for both sides but it does seem likely that more cases like these will follow soon enough as regulators are clearly serious about bringing compliance back into crypto space whether companies like it or not so everyone should make sure they remain up to date with all new regulatory developments related to cryptocurrencies from here onward!