SEC Drops Bombshell: Liquid Staking Cleared as Non-Security in Landmark Decision
The SEC just handed crypto a rare win—liquid staking escapes securities classification, dodging a regulatory bullet.
Why it matters: The ruling could turbocharge Ethereum's staking ecosystem while Wall Street scrambles to 'understand' the tech they'll inevitably try to exploit.
Between the lines: Watch how fast TradFi firms pivot from 'dangerous unregulated scheme' to 'innovative yield product' now that the SEC gave its tacit nod.
The kicker: Another case of regulators playing catch-up while DeFi keeps rewriting finance's rulebook. Banks will still charge you 0.5% for a savings account though.
SEC declares liquid staking activities free from securities laws
In its latest guidance released on Tuesday, the SEC's Division of Corporation Finance clarified that crypto liquid staking activities do not constitute a securities offering. The guidance noted that liquid staking providers are not obligated to register with the agency under existing securities regulations.
"It is the Division's view that participants in Liquid Staking Activities do not need to register with the Commission transactions under the Securities Act, or fall within one of the Securities Act's exemptions from registration in connection with these Liquid Staking Activities," the SEC's staff wrote in the statement.
The Division also clarified that staking receipt tokens — crypto tokens issued to users as evidence of ownership over their staked deposits — do not count as a securities offering. The Division emphasized that the "minting, issuing and redeeming" of these tokens does not provide any real economic benefits to the holders.
The SEC's guidance on liquid staking comes as Chair Paul Atkins shared the agency's commitment to providing clearer guidance on how federal securities laws apply to crypto.
Atkins unveiled "Project Crypto" last week, a regulatory initiative that aims to align securities laws with the advancements in crypto and blockchain. The effort is part of a broader push to make the US the crypto capital of the world under President Donald Trump.
"Under my leadership, the SEC is committed to providing clear guidance on the application of the federal securities laws to emerging technologies and financial activities," SEC Chair Atkins stated in an X post on Tuesday.
The SEC's Division of Corporation Finance released similar clarifications for other crypto activities earlier in the year, including the issuance of meme coins and the non-securities status of protocol staking on proof-of-stake networks.
The move also follows a series of appeals from several digital asset-based firms and staking protocols last week, including Jito Labs, Bitwise, VanEck, and others to the SEC to approve the inclusion of solana (SOL) liquid staking tokens (LSTs) in exchange-traded funds (ETFs).
Most industry experts expect the new clarification to help hasten the process of approving the crypto staking products for Solana and ethereum (ETH) ETFs.
"SEC says certain liquid staking tokens are NOT securities. Think last hurdle in order for SEC to approve staking in spot ETH ETFs," wrote NovaDius Wealth Management President Nate Geraci in a Tuesday X post. "Liquid staking tokens will be used to help manage liquidity with/in spot ETH ETFs, something that was a concern for SEC."
The crypto market is down nearly 2% following the SEC's statement, with Bitcoin (BTC), Ethereum (ETH), and Solana (SOL) trading slightly lower over the past 24 hours.
