The SEC’s crackdown against the Kraken exchange and its shutdown of its crypto-staking services last week set a new precedent for enforcement in the crypto space. The DeFi space could be facing similar challenges.
Lido Finance, the world’s largest DeFi app for crypto staking, has expressed concerns about the future and warned of potential challenges in the wake SEC’s crackdown. Initial reports suggested that Lido Finance, a decentralized platform for crypto-staking, could be benefited from the SEC’s crackdown. This does not seem to be the case.

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Jacob Blish, Lido Finance’s head of business development, said that although on-chain permissionless staking may have some benefits, it all depends on the final resolution to this matter. Blish said that if the US regulators make it clear that no individual can use crypto-staking services in any form, then that would be a different problem. Blish stated this to Bloomberg:
“If they say you are no longer allowed to interact with these protocols or contribute to them, that is the biggest risk I see for a US-based person.” Does that mean I can no longer contribute to Lido? Do I have to leave and do something different?
DeFi Protocol Lido Finance’s Crypto Staking Facility
Nanasen, a blockchain data firm, reports that Lido finance holds more than 4.8 millions Ether worth a staggering $7.2 trillion. DeFi protocols, unlike their centralized counterparts allow people to trade and lend anonymously without intermediaries.
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Many in the crypto community believe that DeFi’s autonomous features keep it out of regulatory scrutiny. This could be disputed if the SEC doesn’t allow DeFi protocols to function in the country.
Blish stated that Lido, unlike other centralized platforms like Kraken offers a “plumbing” function in its crypto-staking service. Blish stated that it is a software. Either the user chooses to engage with the service or not. The user retains full control.”

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Lido currently doesn’t allow users to withdraw staked ETH from its platform. Users will have full control of their coins once this is done. Blish also expressed concern about the lack of clarity in regulatory regulations. He said that the most disappointing thing was that while we as an industry are constantly asked for transparency, then as a US citizen I don’t get any transparency about how [regulator]’s decision-making process is progressing.”
Hester Peirce, the SEC commissioner, also criticised Kraken’s rash actions. She also criticized the SEC’s inability to provide regulatory clarity.

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