Hester Pierce Offers Clarification on ETP Staking but US Senators Dispute SEC’s Approach

Summary

• US lawmakers are pressing the SEC to explain its stance on crypto staking in ETPs.
• Hester Pierce, the SEC commissioner, has pledged more clarity for the cryptocurrency market.
• She is still open to allowing staking and options for ETH-USD ETFs.

A group of US senators has asked the SEC to explain its position on protocol staking in ETPs. At the same time, SEC Commissioner Hester Pierce pledges greater clarification and says she’s willing to allow staking capabilities for ETH-USD ETFs while evaluating the commission’s earlier rulings.

Senator Cynthia Lummis led a letter to the SEC on February 20 in which they questioned why the SEC has consistently removed staking from ETP issuers’ S-1 disclosures.

While the commission has let many digital asset ETPs register, it has not permitted issuers to incorporate protocol staking in their applications.

The senators argue that by barring staking, the government harms competition in the United States and impedes investors who might otherwise benefit from staking profits.

Critics of the SEC’s approach argue that it limits U.S. product offers in comparison to those in Canada, Europe, and the United Kingdom, all of which provide digital asset ETPs with staking.

On February 5, the SEC’s Crypto Task Force met with Jito Labs CEO Lucas Bruder, Multicoin Capital’s Kyle Samani, and legal representatives from both businesses.

During the conference, industry representatives presented two suggestions. One option would be to stake a portion of the ETP’s assets using third-party validators. Another scenario would have ETPs holding so-called “liquid staking tokens,” which represent staked assets. A Solana-based ETP may, for example, comprise a liquid staking derivative such as JitoSOL.

SEC Commissioner Hester Pierce Pledges More Clarity for the Cryptocurrency Business

SEC Commissioner Hester Peirce, sometimes known as “Crypto Mom” by crypto enthusiasts, has stated that she wants to bring transparency to the market. Peirce told Yahoo Finance that she believes the Commission can develop a reasonable legal framework that specifies how some digital assets are classified without making participants frightened of lawsuits. She also leads a new SEC crypto task team created following Trump’s election.

Peirce’s new job has inspired certain business executives. Paul Grewal, the chief legal officer at Coinbase, believes that the move at the SEC could mark a significant shift. He highlighted that during Gary Gensler’s term as head of the agency during the Biden administration, the commission took a harsher stance through litigation and enforcement proceedings. Coinbase also faced a lawsuit in which the commission argued that many of the exchange’s tokens were unregistered securities. Grewal believes the new SEC team, led by interim Chair Mark Uyeda and Peirce, would take a different approach, which may involve clearer guidelines.

Coinbase anticipates a vote next Thursday on whether the SEC will withdraw its action against the business. Grewal commends Peirce and Uyeda for reversing Gary Gensler’s ineffective regulatory-by-enforcement approach and starting fresh discussions with the industry. Under the previous administration, the commission rarely issued specialized guidelines on digital assets. Instead, it claimed that most cryptocurrencies were already covered by current securities regulations and took enforcement action against projects it deemed non-compliant.

Peirce advocated for a fresh method. In a statement headlined “There Must Be Some Way Out of Here,” she invited the public to provide comments on how the SEC should handle cryptocurrency offers and market structure. She proposed that digital asset coin offerings be considered non-securities for a specific period if the issuer follows certain disclosure criteria and does not defend fraud allegations made by authorities. This agreement would apply to all previous and future offers.

Pierce is receptive to staking features in ETPs

Peirce also stated that she is open to allowing staking and options for ETH-USD ETFs and reconsidering her decision not to authorize options for ether-based products. During the previous administration, the SEC permitted the placement of Bitcoin and Ether ETPs and even approved options for Bitcoin ETPs, but it did not permit staking or options on Ether ETFs.

Separately, Peirce was asked about Elon Musk’s Department of Government Efficiency (DOGE) and if it had any direct role at the commission. She said she couldn’t check the figures, but public records show DOGE saved $206,000 by terminating the commission’s media subscriptions, which included Politico Pro and Reuters.

Meanwhile, President Donald Trump issued an executive order instructing autonomous agencies to submit key rules to the Office of Management and Budget for consideration. Peirce stated that this office may be “quite useful” for economic research and issue resolution.

Also Read: Costa Rica Prepares for the Introduction of Its First Bitcoin ETF With BN Fondos

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