Risks of Liquid Staking Announced by an Ex-SEC Aide
Tension in the cryptocurrency community has been heightened by a recent warning from Amanda Fischer, the former chief of staff to SEC Chair Gary Gensler. Fischer likened the high-risk banking tactics that led to Lehman Brothers’ 2008 demise to liquid staking.
Leaders in the cryptocurrency sector criticized her views, as was to be expected, calling them inflated and inaccurate. Fischer stated in a post on X earlier this week that liquid staking entails the repurposing of digital assets in ways that are not clearly regulated.
She said that tokens produced by liquid staking might be used again with little control, writing, “This is blessing the same type of rehypothecation that cratered Lehman Brothers.”
Industry Retaliates
Lawyers, founders, and analysts swiftly responded to her essay with scathing criticism, contesting her understanding of the SEC’s stance. Some noted that the regulator has previously taken action to exempt some staking methods from securities regulations, such as Solana’s Jito or Ethereum’s Lido.
Blockchain lawyer Kurt Watkins clarified, “It’s focused on setups where the provider doesn’t exercise discretion.” He pointed out that passive tokens that are directly linked to original assets are covered under the SEC’s recommendations. The complicated, leveraged goods that Fischer seems to be cautioning about are not included in this.
Fischer’s perspective, according to Austin Campbell, CEO of Zero Knowledge Consulting, displays an antiquated regulatory attitude. He claimed that because they believe that everything is centralized, automated systems confuse them.
Others were more blunt. VanEck’s head of digital asset research, Matthew Sigel, called her comments contradictory. “First, you say the SEC is blessing crypto. Then you say crypto has no SEC oversight. Which is it?”
“To compare transparent, decentralized systems to shady, centralized ones and say the former is worse is insane,” said Mert Mumtaz, CEO of Helius Labs in Solana.
Fischer is currently employed by Better Markets, a policy organization that has long advocated for more stringent regulations pertaining to cryptocurrency. The SEC has not yet publicly addressed her remarks.
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