SEC Greenlights Liquid Staking in ETFs – Crypto Markets Set to Ignite
The SEC just dropped a regulatory bombshell—liquid staking is officially ETF-compatible. Cue the institutional money printers warming up.
Wall Street's New Yield Toy
Forget grandma's bonds—asset managers can now package staked crypto into slick ETF wrappers. Finally, a way to make blockchain rewards 'respectable' enough for pension funds.
Liquidity Meets Legacy Finance
The ruling cracks open a $20B+ staking market to traditional players. Watch TradFi firms suddenly develop 'blockchain expertise' as they scramble for yield.
Regulatory Whiplash Alert
Same SEC that crushed staking services last year now rolls out the red carpet—provided it's their Wall Street buddies holding the bags. How...convenient.
Prediction: First liquid staking ETF hits markets within 90 days. Bonus cynicism: BlackRock will charge 2% fees for what DeFi does at 0.1%.
Liquid Staking Tokens Gain Regulatory Ground
The guidance clarifies that staking receipt tokens (SRTs)—which represent claims on staked crypto and its rewards—are not securities if structured as simple proof of deposit. The SEC determined that in cases where providers perform only administrative functions without directing staking decisions or setting reward terms, there is no investment contract under the Howey Test.
Liquid staking tokens (LSTs), often used to maintain liquidity in on-chain positions, fall under this category. These tokens allow holders to access staking rewards while still using their assets in other financial operations, such as trading or collateral management—without having to unwind the staking position.
Industry Reaction and the ETF Implications
Nate Geraci, co-founder of The ETF Institute, welcomed the decision, calling it a major breakthrough for the future of spot ethereum ETFs. According to Geraci, LSTs can solve a key regulatory hurdle—managing liquidity within ETF portfolios—by enabling staking exposure without locking up assets.
Lucas Bruder, CEO of Jito Labs, praised the SEC’s nuanced approach. His team met with SEC officials earlier this year to explain how LSTs could function inside ETFs without violating securities laws. He now anticipates that fully-staked crypto ETFs using LSTs will eventually become mainstream financial products.
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Cautious Endorsement, Not a Free Pass
While the SEC’s updated stance is a positive signal for DeFi and staking-focused products, it comes with boundaries. The agency emphasized that the guidance applies only to providers operating within narrowly defined administrative roles. If a staking service takes on more discretionary power or alters the basic structure outlined in the statement, it may still fall under securities regulation.
Moreover, while secondary trading of SRTs is also exempt from registration under the described terms, this exemption is not universal. Providers and developers must still carefully assess whether their models stay within the defined regulatory guardrails.
The Bigger Picture
This development builds on a growing body of SEC statements signaling a more refined approach to crypto regulation—particularly when it comes to separating core infrastructure from investment schemes. With liquid staking gaining legitimacy, a future where spot Ethereum ETFs offer staking rewards looks increasingly likely.
However, full approval will depend on ETF issuers maintaining transparency, proper structure, and regulatory dialogue as they bring these innovative products to market.
