SEC Greenlights Liquid Staking—Paving the Way for Crypto ETFs to Finally Unlock Yield
Wall Street's crypto dreams just got a turbocharge. The SEC's latest guidance on liquid staking removes the final regulatory roadblock for staking in spot Bitcoin and Ethereum ETFs—letting institutional investors finally play the yield game they've been eyeing for years.
No more excuses. Asset managers can now bundle staking rewards into ETF structures without sweating over legal gray areas. The move effectively turns passive crypto holdings into revenue-generating assets—something traditional finance has been drooling over since the first Bitcoin futures ETF launched.
But here's the kicker: while TradFi scrambles to capitalize, DeFi protocols have been offering this for half a decade. Maybe banks should've moved faster than a three-legged turtle.
Industry read-through
LSTs allow funds to keep staked exposure liquid, maintaining on-chain staking rewards while holding a transferable receipt token that can be used for portfolio operations, collateral, or redemptions without fully unwinding staking positions.
Lucas Bruder, CEO of Jito Labs, said in a note that the statement showed an “incredibly nuanced understanding” of current liquid staking arrangements.
He added:
Regarding the impact of the decision, Bruder is looking forward to fully-staked ETFs via LSTs coming to market.
The CEO of Jito Labs and other industry playersto discuss staking rules for ETFs.
According to the meeting logs, LSTs were discussed to address the agency’s concerns about redemption timing. The participants highlighted that LSTs within an ETP framework avoid direct involvement in the staking process, streamlining the process.
The liquid staking statement builds on athat other forms of protocol staking likewise do not require registration, and that features such as early withdrawals or slashing protection do not by themselves convert staking into a securities offering.
However, the SEC emphasized that its view applies to administrative and ministerial provider roles and specific fact patterns. Consequently, arrangements that go beyond those boundaries may be treated differently.
