SEC's Crenshaw Challenges Liquid Staking Guidance Realism

SEC Commissioner Challenges Liquid Staking Guidance

SEC Commissioner Caroline Crenshaw voiced strong criticism against the SEC staff's recent guidance on liquid staking, arguing that it lacks practical grounding and clarity. According to Crenshaw, the guidance overlooks key aspects of how staking operates in the current crypto landscape.

Key Concerns Raised by Crenshaw:

• Lack of Clarity: Crenshaw stated the guidance offers minimal clarity to crypto firms.
• Unrealistic Assumptions: The guidance relies on numerous factual assumptions that may not reflect real-world staking operations.
• Limited Legal Authority: The statement doesn't represent an official Commission stance and holds no binding legal authority.

Earlier today, the SEC's Division of Corporation Finance released guidance indicating that certain liquid staking activities would not be classified as securities transactions. This aligns with the accommodating approach previously seen under the Trump administration’s Project Crypto, exempting participants from securities regulations.

Crenshaw, however, argues that the new guidance is built on a fragile foundation, stating:

“The Liquid Staking Statement stacks factual assumption on top of factual assumption on top of factual assumption, resulting in a wobbly wall of facts without an anchor in industry reality.”

She emphasizes that the legal conclusions drawn are heavily dependent on these assumptions. Any deviation from these assumptions could render the guidance inapplicable.

Crenshaw warned that the guidance provides limited assurance to entities involved in liquid staking, as it only reflects the views of the staff and not the broader Commission. She added a note of caution:

“For those entities whose liquid staking programs deviate in any respect from the soaring wall of factual assumptions erected in the Liquid Staking Statement, the message should be clear: Caveat liquid staker.”