1 week ago
US Securities and Exchange Commission (SEC) Commissioner Caroline Crenshaw has criticized caller unit guidance connected liquid staking, informing that it fails to bespeak the practice’s complexities.
On Aug. 5, the SEC’s Division of Corporation Finance asserted that definite liquid staking arrangements, specifically those involving receipt tokens, bash not autumn nether securities regulations.
However, Crenshaw pushed back, arguing that the connection adds disorder alternatively than clarity to the ineligible attraction of liquid staking.
“Instead of clarifying the ineligible landscape, today’s statement, similar different caller unit statements earlier it, lone muddies the waters.”
Crenshaw pointed to 2 large flaws successful the SEC staff’s position. First, she said the guidance relies connected a agelong database of questionable assumptions astir however liquid staking operates. Second, the staff’s ineligible conclusions are heavy caveated, making them unreliable for firms trying to navigate compliance.
She noted that immoderate staking enactment not fitting the precise conditions described successful the papers would autumn extracurricular its scope. Because of this, she argued, the guidance offers small extortion oregon absorption to those progressive successful staking-related services.
Crenshaw besides reminded investors that the guidance represents the sentiment of SEC staff, not the authoritative stance of the Commission itself. As such, she believes it should person been framed arsenic a cautionary alert, not a presumption of regulatory clarity.
Lehman-like risks successful crypto staking
Adding to the concerns, Amanda Fischer, a erstwhile SEC Chief of Staff nether Gary Gensler, drew parallels betwixt liquid staking and the risky fiscal practices that led to Lehman Brothers’ illness successful 2008.
In a post connected X (formerly Twitter), Fischer warned that liquid staking could exposure crypto markets to cascading failures. She explained that the signifier allows users to deposit integer assets and person a synthetic mentation of the aforesaid token, which tin beryllium reused to gain further rewards.
According to Fischer, this mirrors however Lehman reused lawsuit assets to backmost high-risk trades. She argued that liquid staking could replicate the aforesaid vulnerabilities without beardown regulatory oversight.
The erstwhile SEC authoritative besides highlighted the risks of relying connected token issuers, the anticipation of agelong delays erstwhile unstaking, and the menace of method failures oregon hacks. Together, these factors could amplify systemic hazard crossed the crypto sector.
The station SEC authoritative warns liquid staking guidance adds confusion, raising Lehman-like risks appeared archetypal connected CryptoSlate.
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