Ex-SEC Chief of Employees Compares Liquid Staking to Lehman, Crypto Trade Fires Again – Decrypt

Briefly
Amanda Fischer, ex-Chief of Employees to SEC Chair Gary Gensler, in contrast liquid staking to the dangerous rehypothecation practices that helped sink Lehman Brothers.
Crypto attorneys and founders say Fischer overstates the SEC’s stance, which narrowly applies to passive, non-leveraged staking setups.
Figures from VanEck, Solana’s Helius Labs, and Magic Eden referred to as Fischer’s claims deceptive and misinformed.
A former high SEC official’s warning that liquid staking might set off crypto’s personal Lehman-style collapse has drawn sharp rebuke from trade contributors, reigniting debate over how the U.S. ought to regulate staking tokens.Amanda Fischer, who served as Chief of Employees beneath former SEC Chair Gary Gensler, wrote Monday on X that the company’s stance on liquid staking quantities to “blessing the identical sort of rehypothecation that cratered Lehman Brothers.”Fischer argues that liquid staking creates artificial tokens by intermediaries, permitting property to be reused with out clear oversight. She likened it to “rehypothecation,” which is the reuse of consumer collateral by establishments for their very own trades, as practiced at Lehman Brothers earlier than the 2008 monetary disaster.In crypto, she warned, the dangers are amplified by decentralization and the power for property to “be restaked and restaked and restaked” with arguably little oversight.But crypto observers say the problem isn’t leverage however how regulators see crypto.Austin Campbell, founding father of crypto danger and compliance advisory agency Zero Information Consulting, stated that many policymakers proceed to method crypto by older lenses.“They stay in a world that's centralized and intermediated, as a result of that was the one technique to do issues successfully within the Seventies when these programs had been designed,” Campbell advised Decrypt. “They do not understand that they consider all the pieces as centralized, so automated programs actually throw them.”Nonetheless, the query for regulators is in recognizing “who has management,” Campbell stated. “In the event you can management the protocol and the actions, you may have management of the funds. In the event you can’t, you don’t. All of it comes all the way down to the way it’s executed.”Kurt Watkins, a blockchain lawyer and founder who advises crypto startups on regulatory technique, advised Decrypt Fischer is elevating legitimate considerations about how staking will be misused, however argued that her interpretation is “overstating” what the SEC truly stated.Fischer’s studying of the SEC steerage could also be “fairly slender,” Watkins stated, by conflating receipt tokens with extra advanced merchandise.“It is centered on liquid staking setups the place the supplier would not train discretion and the receipt token is only a passive declare on the unique asset, not some artificial product or leveraged place,” Watkins advised Decrypt.Fischer’s publish has triggered swift backlash from outstanding crypto figures.First, you say the SEC is blessing crypto. Then you definately say crypto has no SEC oversight. Which is it? You’re contradicting your self mid-rant,” Matthew Sigel, head of digital property analysis at VanEck, wrote on X.Joe Doll, common counsel at Magic Eden, additionally weighed in, calling Fischer’s publish “extremely deceptive.”It “demonstrates both a misunderstanding of the fundamental technological options that underpin liquid staking (dumb/ill-prepared), or deliberate mischaracterization (malicious),” he wrote.In the meantime, Mert Mumtaz, CEO of Solana infrastructure agency Helius Labs, was extra direct. “Evaluating clear, decentralized programs ruled by auditable code to opaque, shady ones enforced by crooks and saying the previous is worse is insane work,” he responded. “You both do not know how LSTs truly work or are being deliberately obtuse.”Fischer now works at Higher Markets, the identical coverage group that strongly opposed the creation of U.S. spot Bitcoin ETFs.Every day Debrief NewsletterStart daily with the highest information tales proper now, plus authentic options, a podcast, movies and extra.