US Securities and Trade Fee (SEC) Commissioner Caroline Crenshaw has criticized current workers steerage on liquid staking, warning that it fails to mirror the apply’s complexities.
On Aug. 5, the SEC’s Division of Company Finance asserted that sure liquid staking preparations, particularly these involving receipt tokens, don’t fall below securities laws.
Nevertheless, Crenshaw pushed again, arguing that the assertion provides confusion reasonably than readability to the authorized remedy of liquid staking.
“As a substitute of clarifying the authorized panorama, at this time’s assertion, like different current workers statements earlier than it, solely muddies the waters.”
Crenshaw pointed to 2 main flaws within the SEC workers’s place. First, she mentioned the steerage depends on a protracted record of questionable assumptions about how liquid staking operates. Second, the workers’s authorized conclusions are closely caveated, making them unreliable for companies making an attempt to navigate compliance.
She famous that any staking exercise not becoming the exact circumstances described within the doc would fall exterior its scope. Due to this, she argued, the steerage affords little safety or route to these concerned in staking-related providers.
Crenshaw additionally reminded traders that the steerage represents the opinion of SEC workers, not the official stance of the Fee itself. As such, she believes it ought to have been framed as a cautionary alert, not a place of regulatory readability.
Lehman-like dangers in crypto staking
Including to the issues, Amanda Fischer, a former SEC Chief of Workers below Gary Gensler, drew parallels between liquid staking and the dangerous monetary practices that led to Lehman Brothers’ collapse in 2008.
In a submit on X (previously Twitter), Fischer warned that liquid staking might expose crypto markets to cascading failures. She defined that the apply permits customers to deposit digital property and obtain an artificial model of the identical token, which could be reused to earn extra rewards.
In line with Fischer, this mirrors how Lehman reused consumer property to again high-risk trades. She argued that liquid staking might replicate the identical vulnerabilities with out robust regulatory oversight.
The previous SEC official additionally highlighted the dangers of counting on token issuers, the potential for lengthy delays when unstaking, and the specter of technical failures or hacks. Collectively, these components might amplify systemic danger throughout the crypto sector.
