SEC Drops Bombshell: Crypto Liquid Staking Officially Exempt from Securities Classification

The SEC just handed DeFi a get-out-of-jail-free card—liquid staking tokens dodge securities regulation in a landmark decision. TradFi lawyers already drafting appeal paperwork.

The skinny on staking's free pass

No more Howey Test headaches for protocols offering liquid staking derivatives. The ruling effectively greenlights a $43B industry (not that anyone's counting) to operate without securities oversight—for now.

Why Wall Street's fuming

While crypto natives pop champagne, traditional finance grumbles about "regulatory arbitrage." Because nothing triggers bankers faster than watching decentralized finance outmaneuver their compliance departments.

The fine print

The decision specifically excludes staking-as-a-service providers from the exemption. Centralized operators? You're still on the SEC's radar—better dust off those disclosure documents.

One regulator's "innovation-friendly approach" is another's loophole big enough to drive a blockchain through. Either way, staking pools just became the hottest non-security in town.

It is the Division’s view that “Liquid Staking Activities” in connection with Protocol Staking do not involve the offer and sale of securities within the meaning of Section 2(a)(1) of the Securities Act of 1933 (the “Securities Act”) or Section 3(a)(10) of the Securities Exchange Act of 1934 (the “Exchange Act”),” the SEC’s statement reads. “[11] Accordingly, 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.”

This announcement provides clarity for participants in the liquid staking sector, ensuring that such activities do not fall under the regulatory framework typically applied to securities. “Today’s staff statement on liquid staking is a significant step forward in clarifying the staff’s view about crypto asset activities that do not fall within the SEC’s jurisdiction,” SEC Chair Paul Atkins said in a statement.

It also is 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 within the meaning of Section 2(a)(1) of the Securities Act or Section 3(a)(10) of the Exchange Act, unless the deposited Covered Crypto Assets are part of or subject to an investment contract.[12] Accordingly, Liquid Staking Providers involved in the process of minting, issuing and redeeming Staking Receipt Tokens, as described in this statement, as well as persons involved in secondary market offers and sales of Staking Receipt Tokens, do not need to register those transactions with the Commission under the Securities Act or fall within one of the Securities Act’s exemptions from registration, unless the deposited Covered Crypto Assets are part of or subject to an investment contract.

Earlier today, the SEC recognized stablecoins as cash. The regulator has changed its tone on the crypto industry in the last few months following the return of current US President Donald Trump. The regulator’s crypto task force also plans to host several “crypto roundtables” across the US, according to a Friday press release. The recent SEC guidance also aligns with the recently enacted GENIUS Act, signed by TRUMP in July. The law formally acknowledges regulated stablecoins as cash as a new financial instrument that is not a security or commodity.