SEC's crypto staking crackdown has uncertain consequences for DeFi: Lido Finance

A crackdown by the United States securities regulator connected crypto staking could person unintended consequences for decentralized concern (DeFi), according to the caput of concern improvement astatine Lido DAO.   

In a Feb. 13 Bloomberg report Jacob Blish, who leads concern improvement astatine Lido's decentralized autonomous organization (DAO), said the astir important hazard would beryllium if the SEC yet concluded that nary U.S. national tin interact with crypto staking services, including protocols.

"The biggest hazard I personally spot arsenic a U.S.-based idiosyncratic is if they travel down and accidental you tin nary longer adjacent interact with oregon lend to these types of protocols."

"Then me, arsenic a contributor to the DAO, does that mean I can't enactment connected Lido anymore? Do I person to spell permission and bash thing else?" Blish added.

The governance of Lido is managed by the Lido DAO with members from each implicit the satellite voting connected captious decisions that steer the protocol.

In the aftermath of the SEC launching lawsuits and different enforcement actions against crypto firms, Blish joined a increasing fig of radical successful the crypto manufacture calling for much transparency astir regulations and rules going forward, saying:

"The astir disappointing happening is we arsenic an manufacture support getting asked for transparency, but past maine arsenic a U.S. citizen, I get nary transparency and however [regulator's] decision-making process is going."

On Feb. 9 the SEC charged crypto speech Kraken with "failing to registry the connection and merchantability of their crypto-asset staking-as-a-service program" prompting the speech to halt offering staking to its U.S. customers.

I honestly anticipation that idiosyncratic proves, successful court, that determination is simply a legal, user-friendly mentation of custodial staking that tin beryllium offered to US consumers. It’ll beryllium a brutal, lengthy, costly combat and a monolithic distraction but the manufacture and the USA volition beryllium highly grateful. https://t.co/lhZPxykznD

— Jesse Powell (@jespow) February 9, 2023

The SEC's latest enactment saw Coinbase co-founder & CEO, Brian Armstrong, defend staking successful a Feb. 9 Twitter post, saying it would beryllium “a unspeakable way for the U.S.” if a staking prohibition was to happen.

Related: Paxos facing SEC suit implicit Binance USD — Report

Paul Grewal, Chief Legal Officer astatine Coinbase built connected Armstrong's tweets connected Feb. 10 asking for clearer rules for the industry.

"The nationalist shouldn't person to parse complaints successful national tribunal to recognize what a regulator expects," Grewal said.