DeFi Could Face Challenges Due to SEC’s Crackdown on Crypto Staking

Blish believes the biggest challenge would emerge if the SEC decides that no U.S. citizen should interact with crypto staking protocols.

Jacob Blish, the head of business development at Lido DAO, the decentralized autonomous organization behind the largest liquid staking protocol, believes the recent SEC crackdown on crypto staking services could cause new challenges for decentralized finance (DeFi).

According to a Bloomberg report, Blish opined that the state of crypto staking in the U.S. depends on the Securities and Exchange Commission’s (SEC) final resolution.

SEC Crackdown on Staking Could Affect DeFi
Blish disclosed that service providers in the U.S. are facing new challenges due to the SEC’s recent actions against crypto staking.

Recall that the SEC recently probed and sued major American crypto exchange Kraken for offering staking services to U.S. investors. In a settlement deal with the regulator, Kraken agreed to pay a civil penalty of $30 million and immediately shut down its staking platform in the U.S.

Commenting on the SEC’s action, Blish opined that although the move could benefit on-chain liquid staking providers, the final resolution could bring up new challenges for DeFi.

“I have been getting a lot more questions about ‘does this impact Lido, what are your thoughts on this? I personally think this is a net benefit for on-chain permissionless liquid staking or staking providers, but it really depends on what the final resolution is,” he said.

“A Different Problem”
Furthermore, the Lido DAO executive insisted that there would be a different problem if U.S. regulators decided that no individual should interact with any staking services.

“The biggest risk I personally see as a US-based person is if they come down and say you can no longer even interact with or contribute to these types of protocols. Then me as a contributor to the DAO, does that mean I can’t work on Lido anymore? Do I have to go leave and do something else?”

Blish also asserted that regulators’ request for transparency on the industry’s part should match the transparency on how decisions are made.

Meanwhile, Lido Finance is currently the largest ether (ETH) staking protocol, with over 4.8 million ETH valued at about $7.2 billion staked on the platform. Blish believes that Lido serves a “plumbing” function in ETH staking.