SEC Clarifies Liquid Staking Exempt from Securities Laws in Specific Scenarios
SEC Clarifies Liquid Staking Not Subject to Securities Laws Under Certain Conditions
In a statement issued on August 5, the U.S. Securities and Exchange Commission’s (SEC) Division of Corporation Finance clarified that certain liquid staking activities connected to protocol staking do not constitute the sale of securities. According to the statement, parties involved in minting, offering, or redeeming liquid staking tokens are not required to register with the SEC, provided specific conditions are met.
What Is Staking — And What Makes It ‘Liquid’?
In the world of cryptocurrency, staking involves locking up crypto assets—such as Ethereum—to help validate transactions and secure a proof-of-stake (PoS) blockchain network. In return, users typically earn rewards for contributing to the network’s security.
Liquid staking introduces a twist: unlike traditional staking, your crypto doesn’t get locked up. Instead, you receive a tokenized version of the staked asset—like sETH—which remains tradable and liquid. This allows users to participate in staking rewards without sacrificing asset mobility.
SEC’s View on Staking Receipt Tokens
The SEC’s Division of Corporation Finance stated that the issuance of these so-called “Staking Receipt Tokens”—which represent the staked assets—does not amount to the offer or sale of securities, unless the underlying crypto assets are themselves subject to an investment contract.
SEC Leadership Comments on the Announcement
SEC Chairman Paul Atkins emphasized the agency’s focus on providing transparency around emerging technologies:
“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,” he said. “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.”
Commissioner Hester Peirce echoed that sentiment, stating that liquid staking tied to protocol-level activity doesn’t constitute the sale of a security:
“Instead, it is a variant on the longstanding practice of depositing goods with an agent who performs a ministerial function in exchange for a receipt that evidences ownership of the goods,” she explained.
What This Means for Ethereum ETFs and the Industry
The SEC’s clarification may open the door for crypto ETF issuers—such as Bitwise—who have long advocated for the inclusion of staking in Ethereum-based exchange-traded funds.
Nate Geraci, President of NovaDius Wealth Management, believes this move could be a game-changer:
“Think last hurdle in order for SEC to approve staking in spot ETH ETFs,” he said. “Liquid staking tokens will be used to help manage liquidity within spot ETH ETFs—something that was a concern for the SEC.”
Originally reported by TheStreet on August 5, 2025.
