- SEC staff said certain liquid staking activities are not sales of securities in a new staff statement.
- The statement clarifies that “Liquid Staking Receipt Tokens” do not need to be registered under securities law.
- SEC Chair Paul Atkins called the move “an important step forward in clarifying staff views” on crypto activities.
In a widely welcomed and significant development, the Division of Corporation Finance of the U.S. Securities and Exchange Commission (SEC) issued a staff statement clarifying that certain liquid staking activities tied to protocol staking are not sales of securities.
Released on August 5, the statement provides regulatory clarity long sought by a major and fast-growing segment of the cryptocurrency ecosystem.
The SEC division’s statement explains that parties involved in minting, offering, and redeeming certain liquid staking tokens do not need to register with federal securities regulators under securities laws.
Put simply, the offer and sale of the “Liquid Staking Receipt Tokens” referenced in the statement are not deemed securities offerings unless the underlying deposited crypto assets are themselves part of or subject to an investment contract.
This clarification is important for the crypto industry. In cryptocurrency systems, staking is the process of locking up crypto assets, such as Ethereum (ETH), to help secure proof-of-stake (PoS) blockchains in exchange for rewards. Liquid staking is a popular variant of that process.
When users stake their crypto through a liquid staking protocol, they receive a tokenized version of their staked asset—examples include sETH for staked ETH.
A defining feature of these liquid staking tokens is that, unlike traditionally staked assets, they remain liquid: they can be traded, lent, or used in other decentralized finance (DeFi) applications while the original asset continues to earn staking rewards.
SEC Chair Paul Atkins framed the announcement as part of a broader commitment to offer clear guidance about emerging technologies.
“Under my leadership, the SEC is committed to providing clear guidance on how federal securities laws apply to new and emerging financial technologies and activities,” Atkins said.
“Today’s staff statement on liquid staking is an important step forward in clarifying staff views about crypto-asset activities that fall outside the SEC’s jurisdiction.”
Commissioner Hester Peirce, a long-time advocate for regulatory clarity in the crypto space, also welcomed the statement.
She noted that it clarifies that liquid staking activities related to protocol staking are not sales of securities.
“Instead, it is a variation on the long-standing commercial practice of depositing goods with an agent who performs ministerial functions in exchange for a receipt that evidences ownership of those goods,” she added, offering a practical analogy to traditional commercial practices.
Industry leaders celebrate, attention turns to Ethereum ETFs
The crypto industry reacted positively to the SEC’s clarification. Alexander Grieve, Vice President of Government Affairs at crypto investment firm Paradigm, praised the move.
Miles Jennings, Head of Policy & General Counsel at leading crypto-focused venture firm Andreessen Horowitz (a16z), went further, calling it “a big win.”
The timing and implications of this development are particularly relevant for issuers pursuing spot Ethereum ETFs. Firms such as Bitwise have been actively seeking SEC approval to permit staking within their Ethereum ETF structures, a feature that would allow funds to generate additional yield for investors.
Many view the SEC’s new clarification on liquid staking as a meaningful step toward making that possibility practical.
Nate Geraci, President of NovaDius Wealth Management, expressed optimism and suggested the statement could resolve a final regulatory concern.
“Think of this as the last hurdle for the SEC to approve staking in a spot ETH ETF,” he said, explaining how liquid staking tokens could be an important operational tool. “Liquid staking tokens can be used to help manage liquidity without the spot ETH ETF itself performing staking directly, which has been an SEC operational concern.”
By providing a tradable, liquid representation of staked assets, these tokens could help ETF issuers efficiently manage daily fund inflows and outflows, addressing one of the operational issues the SEC has previously raised.