SEC commissioner breaks with SEC, Gensler on crypto regulation

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US Securities and Exchange Commission (SEC) Commissioner Hester Peirce speaks during the DC Blockchain Summit in Washington, DC on Tuesday, May 24, 2022.

Valerie Plesch | Bloomberg | Getty Images

Hester Peirce of the Securities and Exchange Commission publicly rebuked her agency’s overt crypto regulation through enforcement, questioning whether a “hostile” regulator was the best solution for the industry.

Peirce, who was appointed commissioner by President Trump in 2018, wrote in a statement Thursday that she disagrees with the SEC’s claim that the shutdown of crypto exchange Kraken’s staking program is a “win for investors.”

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The SEC lawsuit against Kraken, which was settled without admission or denial of wrongdoing, alleged that the exchange was involved in the unregistered offering and sale of securities through its crypto lending platform. Peirce said that wasn’t the main problem.

“Whether or not to agree with this analysis, a more fundamental question is whether SEC registration would have been possible,” Peirce wrote. “In the current climate, crypto-related offerings are not making it through the SEC’s registration pipeline.”

Without directly mentioning SEC Chairman Gary Gensler, Peirce was aiming at what coin base CEO Brian Armstrong described Wednesday night as the SEC’s “regulation by enforcement.”

“Using enforcement to tell people what the law is in a burgeoning industry is not an efficient or fair way to regulate,” Peirce wrote.

Gensler, lawmakers, and the White House have called for tighter regulation of the cryptocurrency industry. But Gensler and the SEC Enforcement Division under his control have been far more aggressive than the Justice Department or policymakers to contain the crypto industry.

In a press release announcing the Kraken deal, SEC Enforcement Director Gurbir Grewal said the action was a step to restrict companies whose “investors lack the disclosures they deserve and are harmed when they make them.” not received”.

Peirce, who disagreed with the enforcement action, indirectly contested the premise of this allegation.

“Most concerning, however, is that our solution to a failure to register a violation is to completely shut down a program that has served people well,” she wrote. “However, whether we need a unified regulatory solution, and whether that regulatory solution is best provided by an anti-crypto regulator in the form of an enforcement action, is less clear.”