SEC Commissioner Crenshaw Disputes Liquid Staking Guidance Clarity

SEC Commissioner Caroline A. Crenshaw has publicly distanced herself from the recent staff guidance issued by the U.S. Securities and Exchange Commission (SEC) on liquid staking activities, warning entities to carefully interpret the statement and remain compliant with existing regulatory frameworks [1]. The guidance, intended to clarify how liquid staking tokens are treated under securities law, was criticized by Crenshaw for its lack of clarity and its reliance on what she described as "unsupported factual assumptions and circumscribed legal analysis" [2]. In her statement, she argued that the guidance "only muddies the waters" and fails to provide meaningful clarity for market participants.

Crenshaw’s critique highlights the ongoing debate within the SEC over how traditional securities laws should apply to emerging crypto-native constructs like liquid staking. While the Division of Corporation Finance issued the statement with the intention of offering clarity, Crenshaw took a more skeptical view, suggesting that the analysis is "a wobbly wall of facts without an anchor in industry reality" [3]. She emphasized that entities whose liquid staking programs deviate from the assumptions laid out in the guidance should be particularly cautious, warning with a pointed Latin phrase: "Caveat liquid staker."

Crenshaw, despite being a Democrat and a Harvard graduate, was appointed to the SEC by Donald Trump in 2020. Her term was set to expire in late 2024, though according to the SEC’s website, commissioners may serve for up to 18 additional months beyond their official term [2]. Crenshaw’s sharp remarks may reflect a final effort to push back against the crypto industry’s broader campaign to have her removed from the commission.

The release of the staff guidance and Crenshaw’s public dissent have reignited discussions among legal experts, industry participants, and investors about the implications for compliance and innovation in the DeFi space. As the SEC continues to grapple with how to regulate crypto innovations, the division among its leadership underscores the complexity of applying traditional regulatory frameworks to rapidly evolving markets [3].

Source: [1]https://twitter.com/BTCTN/status/1953200963801497954

[2]https://api.news.bitcoin.com/wp-json/bcn/v1/post?slug=sec-commissioner-crenshaw-rebuffs-statement-on-liquid-staking

[3]https://kanalcoin.com/sec-guidance-liquid-staking-defi/