Criticism of the SEC mounts after warning about the risks of liquid staking

• SEC Increases Regulatory Uncertainty Over Cryptocurrency Staking
• Commissioner warns of systemic risks and lack of clarity
• Liquid Staking Compared to the Collapse of Lehman Brothers

SEC Commissioner Caroline Crenshaw publicly contested the agency's Division of Corporation Finance's recent guidance on liquid staking, saying the statement adds to regulatory confusion rather than offering clear guidelines for the cryptocurrency industry.

Released on August 5th, the technical team's note indicated that certain liquid staking models—especially those involving receipt tokens—do not fall under the definition of securities. However, Crenshaw disagreed with the analysis, claiming that the opinion is riddled with "questionable assumptions" and legal limitations that hinder its practical application.

“Rather than clarifying the legal landscape, today’s statement, like other recent statements from the team before it, only muddies the waters.”

Crenshaw said, adding that the note should be considered a warning, not an official position of the Commission.

The commissioner highlighted that the current interpretation does not offer effective protection for companies operating staking services, since any model outside the parameters described would automatically fall outside the scope of the guidance.

These concerns were reinforced by Amanda Fischer, former SEC chief of staff, who warned of the risk of cascading effects similar to those of the 2008 crisis. According to her, liquid staking allows users to deposit assets and receive synthetic versions of the same tokens, which can then be redeployed for new financial activities—a mechanism reminiscent of Lehman Brothers' aggressive asset repurposing.

"This model creates vulnerabilities that can spread rapidly without rigorous oversight," Fischer said in a post on X. She also mentioned risks related to dependence on token issuers, delays in redemptions, and technical flaws that could compromise the entire crypto asset liquidity chain.

The SEC's latest crypto giveaway is to bless the same type of rehypothecation that cratered Lehman Brothers – only in crypto it's worse because you can do it without any SEC or Fed oversight.

So what's going on? (thread)

— Amanda Fischer (@amandalfischer) August 5, 2025

The debate surrounding liquid staking regulation comes as institutional investors and DeFi platforms are stepping up their presence in the market, increasing the urgency for consistent and secure guidelines for cryptocurrency-based operations.