tl;dr
Former SEC official Amanda Fischer warned that liquid staking in crypto could cause a collapse similar to Lehman Brothers, comparing it to risky rehypothecation practices from the 2008 financial crisis due to synthetic tokens and repeated restaking lacking oversight. Industry experts disagreed, argu...
A former top SEC official, Amanda Fischer, has warned that liquid staking in crypto could trigger a catastrophic collapse akin to Lehman Brothers' downfall. Fischer likened liquid staking to rehypothecation—the risky reuse of client collateral that contributed to the 2008 financial crisis—arguing that liquid staking's synthetic tokens and repeated restaking operate with insufficient oversight, heightening systemic risks.
Industry experts, however, have pushed back on Fischer's claims, emphasizing that the fundamental issue lies in how regulators perceive and approach crypto rather than leverage itself. Austin Campbell, a crypto risk consultant, pointed out that many policymakers still apply old, centralized frameworks to decentralized crypto systems, creating a disconnect in regulatory understanding.
Kurt Watkins, a blockchain attorney, acknowledged valid concerns about the misuse of staking but suggested Fischer's interpretation of SEC guidance was overly narrow and conflated simple receipt tokens with more complex products. He noted that many liquid staking tokens actually represent passive claims without the leverage risks Fischer highlights.
Criticism from the crypto community was swift and strong. Matthew Sigel from VanEck challenged Fischer’s contradictory statements on SEC oversight. Joe Doll of Magic Eden called her claims misleading, alleging either ignorance or intentional mischaracterization of liquid staking technology. Mert Mumtaz of Helius Labs condemned Fischer’s comparison of transparent, auditable decentralized systems to opaque, corrupt traditional financial practices as uninformed or willfully obtuse.
Fischer, now with the policy group Better Markets—which has previously opposed U.S. spot Bitcoin ETFs—continues to influence the debate over how liquid staking and related crypto products should be regulated, spotlighting an ongoing clash between traditional regulatory frameworks and the rapidly evolving crypto ecosystem.