US Securities and Exchange Commission (SEC) Commissioner Caroline Crenshaw has criticized recent staff guidelines about the use of liquid, warns that it does not reflect the complexity of the practice.
On August 5, the SEC distribution of Corporation Finance claimed that certain regulations for the use of liquid, in particular those with reception tokens, do not fall under securities instructions.
However, Crenshaw pushed back and argued that the statement adds confusion instead of clarity to the legal treatment of the use of liquids.
“Instead of clarifying the legal landscape, today’s statement, just like other recent staff statements, is just the waters.”
Crenshaw pointed to two major errors in the position of the SEC staff. First of all, she said that the guidelines depend on a long list of questionable assumptions about how the use of liquid works. Secondly, the legal conclusions of the staff are heavily leading, making them unreliable for companies trying to navigate.
She noted that any deployment activity that does not fit into the precise circumstances in the document would fall outside the scope. Because of this, she argued, the guidance offers little protection or direction to those involved in setting services.
Crenshaw also reminded investors that the guidance represents the opinion of SEC employees, not the official position of the committee itself. As such, she believes that it should have been set as a warning, not a position of regulatory clarity.
Lehman-like risks when using crypto
The worries, Amanda Fischer, a former SEC -Staff chef under Gary Genler, attracted parallels between the use of liquid and the risky financial practices that led to the collapse of Lehman Brothers in 2008.
In a message on X (formerly Twitter), Fischer warned that the use of liquid cryptom markets could expose to traps for kicking errors. She explained that the practice enables users to deposit digital assets and receive a synthetic version of the same token, which can be reused to earn extra rewards.
According to Fischer, this reflects how Lehman recyes client assets to support risky transactions. She argued that the use of liquid could replicate the same vulnerabilities without strong supervision of regulatory supervision.
The former SEC officer also emphasized the risks to rely on token spending, the possibility of long delays in the non -deployment and the threat of technical failures or hacks. Together, these factors can strengthen systemic risk in the crypto sector.