Commissioner Peirce claims that the SEC did not consult with the industry prior to Kraken’s Staking Fees

The SEC commissioner spoke one day after Kraken reached a settlement with the agency over allegations that its U.S. staking service constituted an unregistered securities offering.

PHILADELPHIA — Commissioner Hester Peirce said on Friday that the U.S. Securities and Exchange Commission did not seek to communicate with the cryptocurrency sector before initiating this week’s unregistered securities crackdown on staking-as-a-service.

Peirce, speaking at a student conference at the University of Pennsylvania, described the U.S.’s top securities regulator’s lawsuit against the Kraken cryptocurrency exchange as the most recent instance of enforcement-based regulation in the digital assets market. Thursday, Kraken paid $30 million and ceased its U.S. staking operations after the SEC charged the company with breaching federal securities law.

Peirce said that “we had not attempted to meet down with industry members” to discuss staking, the technique through which crypto holders delegate their tokens to validators in exchange for crypto incentives. She said that the SEC has been aware of staking for a long time and that its choice to strike now was “arbitrary,” as was Kraken’s staking business being singled out.

“The decision made yesterday essentially said, “Let’s simply shut it down.” That cannot be the solution, “Commissioner said.

Peirce’s remarks increase the possibility that the SEC’s struggle against Kraken’s staking may escalate into a larger conflict. Kraken is not the only U.S. company that provides staking services to U.S. clients. Coinbase (COIN), a publicly listed corporation, also allows staking, and it has said that commerce would continue online.

She was particularly offended by the settlement’s restrictive terms. She said that because it has pledged to never restart its staking business for U.S. consumers, it cannot even go through the motions of operating above board in the SEC’s eyes.

Under the leadership of Chairman Gary Gensler, the SEC has adopted a strong approach to its monitoring of the cryptocurrency business. Peirce has been an outspoken critic of the agency’s encryption policy for years.

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