Amanda Fischer, a former Chief of Staff to SEC Chair Gary Gensler and now policy director at financial reform advocacy group Better Markets, has ignited fierce debate across the digital asset industry after likening liquid staking to the high-risk asset practices that contributed to the 2008 collapse of Lehman Brothers.
In a recent post on X (formerly Twitter), Fischer suggested that liquid staking represents a form of “rehypothecation,” whereby assets are pledged, re-used, and leveraged across multiple financial actors. “The SEC’s approach to liquid staking blesses the same type of rehypothecation that cratered Lehman Brothers,” she wrote, sparking concern among regulators and outrage among crypto proponents.
Fischer’s concern stems from the way staking derivatives, such as liquid staking tokens (LSTs), are issued by intermediaries. These tokens represent staked assets and can be reused in decentralized finance (DeFi) protocols. According to Fischer, this practice opens the door to systemic risk by enabling the same capital to be effectively counted multiple times within the financial system.
Industry leaders quickly responded with strong pushback, challenging both the technical and regulatory accuracy of Fischer’s analogy. Joe Doll, general counsel at NFT platform Magic Eden, described her claims as “incredibly misleading,” arguing that liquid staking involves transparency and auditability not found in traditional finance.
Matthew Sigel, head of digital asset research at VanEck, pointed to contradictions in Fischer’s framing, suggesting that it undermines her own arguments about regulatory overreach. Mert Mumtaz, co-founder of Solana infrastructure firm Helius Labs, called the comparison to Lehman “insane,” emphasizing that decentralized staking protocols do not operate under the same shadowy structures as centralized banks.
The industry’s main counterpoint: Unlike the opaque leverage chains that defined Lehman’s downfall, liquid staking occurs on-chain, with smart contracts and tokenized collateral visible to anyone with a blockchain explorer.
Legal analysts have also criticized Fischer’s take as overly expansive. Kurt Watkins, a legal expert specializing in crypto regulation, explained that the SEC’s guidance is narrowly focused on passive staking through intermediaries that do not exercise discretionary control. “Equating staking tokens with synthetic rehypothecation misses the technical safeguards inherent to blockchain-based systems,” he said.
Fischer’s comments reflect a growing schism between policy advocates in Washington and builders in the crypto ecosystem. While regulators are focused on preventing another systemic financial crisis, industry stakeholders maintain that decentralized finance is inherently more transparent and resilient than its centralized predecessors.
As the SEC continues to refine its stance on staking and DeFi more broadly, Fischer’s controversial remarks may shape both internal policy debates and future enforcement actions. For now, the response from the crypto community is clear: comparisons to Lehman Brothers are not only unfounded, but dangerously misleading.
