SEC Commissioner Goes Against Her Agency On Kraken Crackdown
Hester Peirce, an SEC commissioner, publicly disagreed with her organization's enforcement action against the cryptocurrency exchange Kraken.
Peirce stated that the current regulatory environment made it hard for crypto-related offerings to even receive approval.
Peirce's disagreement comes as SEC chairman Gary Gensler keeps taking action against businesses and offerings tied to cryptocurrencies.
The Securities and Exchange Commission's Hester Peirce publicly
Criticised her organization's administration of cryptocurrency laws, calling them "paternalistic and lazy," and questioned whether such a "hostile" regulator is the best solution for the industry.
In a statement on Thursday, Peirce, who was appointed to her position as a commissioner by President Donald Trump in 2018, expressed her disagreement with the SEC's claim that the termination of crypto exchange Kraken's staking programme was a "victory for investors."
The SEC complaint against Kraken, which was resolved without an admission of guilt or denial of wrongdoing, claimed that the exchange had used its cryptocurrency lending platform to participate in the unregistered offer and sale of securities. That isn't the main problem, according to Peirce.
Whether one agrees with that reasoning or not, Peirce argued that the most important question is whether SEC registration would have been feasible.“In the current climate, cryptocurrency-related offerings do not go through the SEC's registration process.”
Peirce attacked what Coinbase CEO Brian Armstrong referred to on Wednesday night as the SEC's "regulation by enforcement" without specifically referencing SEC head Gary Gensler. In an expanding business, Peirce argued, "It is not an effective or fair way of governing to use enforcement actions to tell people what the law is."
The White House, Congress, and Gensler have asked for stricter regulation of the bitcoin market. But in their efforts to rein in the cryptocurrency business, Gensler and the SEC Enforcement division that reports to him have been far more active than the Department of Justice or lawmakers.
Gurbir Grewal, the director of SEC enforcement, stated in a press statement announcing the Kraken settlement that the action was taken to stop businesses whose "investors lack the disclosures they need and are damaged when they don't receive them."Indirectly contesting the foundation of that argument was Peirce, who disagreed with the enforcement action.
What's most worrying, she added, "is that our response to a failure to register violation is to completely shut down a service that has benefited people well." "However, it is less obvious if we need a uniform regulatory response or if that regulatory solution, in the shape of an enforcement action, is best given by a regulator that is opposed to cryptocurrency."
