SEC Drops Bombshell: Liquid Staking Tokens Are Just Receipts—Not Securities

The SEC just rewrote the rulebook—liquid staking tokens aren’t securities, they’re glorified IOU slips. Cue the collective sigh of relief from DeFi degenerates.

Regulators blink first

In a move that’ll have crypto lawyers popping champagne, the SEC quietly admitted what traders knew all along: staking derivatives are receipts, not investment contracts. The fine print? ‘No promises of profits’ means no Howey test—for now.

Wall Street’s worst nightmare

While TradFi brokers dust off their ‘blockchain is risky’ PowerPoints, Ethereum validators are stacking sats like there’s no tomorrow. The kicker? This ‘clarification’ drops right as BlackRock files for its third tokenized fund—coincidence or calculated leak?

One regulator’s ‘consumer protection’ is another’s innovation straitjacket. But hey, at least the SEC didn’t call them ‘unregistered securities’ this time—progress by Washington standards.

Additional clarity

On the legal analysis, the Division applies Howey and finds the provider’s role administrative or ministerial, not the kind of entrepreneurial or managerial efforts that create an investment contract. 

Providers facilitate staking but do not decide whether, when, or how much a depositor stakes, nor do they set or guarantee rewards. 

As a result, the covered liquid staking activities do not involve securities transactions, and SRTs themselves are not securities, being so much as receipts for non-security assets.

Secondary-market offers of SRTs likewise do not require registration under the described conditions.

Yet, the SEC issued aclarifying that the view does not extend to providers that go beyond administrative functions or to structures that deviate from the statement.

Consequently, although most of the SRT currently offered in the market are not considered securities, the agency’s statement is not a blanket approval for liquid staking in the US.

Elaborating on staking

The update builds on athat addressed other forms of protocol staking, such as self/solo, delegated, custodial, and non-custodial. Likewise, the regulator concluded that participants do not need to register those activities. 

The earlier guidance also noted that features such as early withdrawals, bundled rewards, slashing protection, or asset aggregation do not convert staking into a securities offering by themselves. 

Together, the two statements sketch more precise boundaries for staking under federal securities laws while leaving room for fact-specific assessment.