SEC Commissioner Caroline Crenshaw believes that the recent employee guidance on liquidity stocks fails to reflect the complexities of practice, instead exacerbating confusion rather than clarifying the situation, similar to issues raised in other recent staff statements from the SEC.
Crenshaw pointed out two major flaws in the guidance: first, reliance on a series of questionable assumptions about how liquidity evaporates; and second, serious problems with the staff's legal conclusions, making them unreliable for companies attempting to comply.
She also mentioned that any relevant activities that do not meet the exact conditions described in the documents are not covered by the guidelines, making it nearly impossible for the guidelines to provide protection or guidance for those involved in related services.
Crenshaw reminded investors that this guidance only represents the opinions of SEC staff and not the official position of the Commission itself, and should be viewed as a warning rather than a position with regulatory clarity.
Lehman-like risks in cryptocurrency
Amanda Fischer, former chief counsel at the SEC under Gary Gensler, drew a parallel between liquidity-related operations and risks and the situation that led to the collapse of Lehman Brothers in 2008.
Fischer warned in a post on X (formerly Twitter) that liquidity-related arrangements could expose the cryptocurrency market to the risk of cascading failures. This practice allows users to deposit digital assets and receive synthetic versions of the same tokens, which can be reused to earn additional rewards.
Fischer believes this is similar to Lehman Brothers' practice of reusing client assets to support high-risk trades, and that liquidity-related arrangements could replicate the same vulnerabilities in the absence of strong regulatory oversight.
The former SEC official also highlighted numerous risks, including reliance on token issuers, the risk of prolonged delays in operations, and the threat of technical failures or hacking attacks, all of which could collectively exacerbate systemic risks in the cryptocurrency sector.
The above content primarily revolves around the controversy surrounding the SEC's official guidance on liquidity and the risks in the cryptocurrency sector that are reminiscent of the Lehman Brothers incident, with relevant information initially appearing in hidden slate.
