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'Caveat Liquid Staker': Caroline Crenshaw Warns Against SEC’s New Stance

Key Takeaways

  • ​A recent SEC memo on liquid staking has triggered internal disagreement among its commissioners;
  • Crenshaw warned that the guidance could mislead firms by calling the update untested and unclear;
  • Peirce supported the update by saying liquid staking does not always involve securities.

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'Caveat Liquid Staker': Caroline Crenshaw Warns Against SEC’s New Stance

A recent statement from a division within the US Securities and Exchange Commission (SEC) has sparked disagreement among its top officials, with Commissioner Caroline Crenshaw pushing back against it.

The statement, released by the Division of Corporation Finance on August 5, suggested that some forms of liquid staking might not fall under US securities laws, depending on how they are set up.

SEC Chair Paul Atkins stated that the update helped make clear which crypto activities are outside the agency’s reach.

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However, Commissioner Crenshaw argued, "Some things are better left unsaid". She said the statement relies on guesses that have not been tested and may give people the wrong idea.

Crenshaw added that the memo builds a "wobbly wall of facts" and does not match how the industry actually works. She ended her note with a warning to those offering liquid staking services, "Caveat liquid staker".

Commissioner Hester Peirce took a different view. In her follow-up note, she compared liquid staking to storing goods and getting a receipt in return. Peirce stated that using tokens tied to staked crypto does not automatically mean a security is being offered.

Liquid staking is a method where users lock their crypto in a network to earn rewards. At the same time, they receive a token that shows they still own the original assets. This token can then be used in trading or other decentralized finance (DeFi) activities.

Recently, Commissioner Peirce called for stronger protection of people’s right to make private transactions. What did she say? Read the full story.

Aaron S. Editor-In-Chief
Having completed a Master’s degree in Economics, Politics, and Cultures of the East Asia region, Aaron has written scientific papers analyzing the differences between Western and Collective forms of capitalism in the post-World War II era.
With close to a decade of experience in the FinTech industry, Aaron understands all of the biggest issues and struggles that crypto enthusiasts face. He’s a passionate analyst who is concerned with data-driven and fact-based content, as well as that which speaks to both Web3 natives and industry newcomers.
Aaron is the go-to person for everything and anything related to digital currencies. With a huge passion for blockchain & Web3 education, Aaron strives to transform the space as we know it, and make it more approachable to complete beginners.
Aaron has been quoted by multiple established outlets, and is a published author himself. Even during his free time, he enjoys researching the market trends, and looking for the next supernova.

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