SEC’s Liquid Staking Bombshell: How Ethereum ETFs Could Get Rocked in 2025

The SEC just dropped a regulatory grenade—and liquid staking tokens might be holding the pin. Here’s why Ethereum ETF hopefuls are sweating bullets.

Liquid Staking’s Make-or-Break Moment

Forget "passive income"—the SEC’s new guidance treats staked ETH like a securities time bomb. Analysts whisper that ETF issuers are scrambling to rewrite prospectuses overnight. One insider quipped: "Wall Street’s playing regulatory Jenga while crypto natives built the tower."

The ETF Approval Endgame

Applications hanging in the balance? Check. Lawyers billing by the hour? Obviously. But here’s the kicker: funds that bypassed staking provisions now face brutal reworks. "They’ll comply," shrugs a Bloomberg Intelligence analyst. "After all, nothing gets trad-fi excited like watering down innovation."

Betting Against the House

While purists cheer the SEC’s stance as a win for decentralization, CEX listings tell another story. Coinbase’s staked ETH volume spiked 300% last quarter—proof that when regulators zig, capital zags. As one trader put it: "The house always changes the rules... right after the smart money places its bets."

Key Takeaways

SEC issued a staff guidance noting that some liquid staking services are outside the purview of federal securities law. Analysts now believe this could fast-track ETF staking approval. 

The U.S. Securities and Exchange Commission (SEC) has clarified that, like protocol staking, some liquid staking services are outside of federal securities laws. 

In a statement on the 6th of August, the SEC’s Division of Corporation Finance added, 

“It is also the Division’s view that the offer and sale of Staking Receipt Tokens, in the manner and under the circumstances described in this statement, do not involve the offer and sale of securities.”

The agency noted that liquid staking providers only act as agents and issue staked tokens (staking receipt tokens).

However, they do not control how the staking happens. As such, they are not managers and don’t fall within the categorization of ‘investment contract.’

SEC is divided on the guidance

This meant that liquid staked tokens (LSTs) like staked ethereum [ETH] (e.g. stETH), staked Solana [SOL] (e.g. JITOSOL), and others aren’t securities. 

So, liquid staking providers like Rocket Pool [RPL], Lido [LDO], and others don’t need to register with the regulator. 

SEC chair Paul Atkins hailed the MOVE as part of the agency’s efforts via ‘Project Crypto.’

Source: X

SEC Commissioner Hester Pierce welcomed the update, calling liquid staking a ‘new solution to an old problem.’

She added that staked tokens act as legal receipts, enhance liquidity, and simplify settlements for depositors. 

However, SEC Commissioner Caroline Crenshaw dissented against the directive and warned liquid staking providers to have ‘little comfort’ as it could be reversed. 

Great for ETF staking approval?

For her part, Rebecca Rettig, legal chief at liquid staking provider Jito, said, 

“It’s what we’ve been waiting for…LSTs are not securities. Ready to see them in ETFs!”

A similar bullish take was made by Nate Geraci, co-founder of ETF Institute. He noted that the guidance cleared a key roadblock and WOULD fast-track approval of ETH ETF staking. 

Source: X

The latest staff guidance followed a similar one for protocol staking in May, establishing that proof-of-staking (PoS) systems are not securities. 

This is part of a broader shift by regulators, including the CFTC’s ‘Crypto Sprint’, to offer extensive clarity in the sector. 

In an email statement, RAY Youssef, CEO of NoOnes, told AMBCrypto that the changes were setting the foundation for asset tokenization.  

“This paves the way for asset tokenization and a more structured, compliant digital finance system and is aimed at reinforcing the financial hegemony of the United States in the global Web3 digital economy.”