Ethereum News Today: SEC Declares Liquid Staking Not a Security Under U.S. Law

The U.S. Securities and Exchange Commission (SEC) has issued a staff-level statement clarifying that liquid staking activities and their associated tokens are not classified as securities under U.S. law, according to a recent announcement from the SEC’s Division of Corporation Finance [1]. Released on August 5, 2025, the guidance addresses growing institutional and market demand for regulatory clarity in the crypto staking space, particularly around the mechanics of liquid staking protocols such as those used in Ethereum and Solana networks [1].

The decision specifically excludes liquid staking receipts—such as stETH, rETH, and cbETH—from the definition of securities, as long as the underlying assets are not tied to an investment contract [2]. This distinction removes a key regulatory barrier that had previously deterred institutional adoption and innovation in the DeFi space. By affirming that liquid staking is not a securities-related activity, the SEC is effectively supporting the growth of DeFi ecosystems on platforms like Ethereum and Solana [1].

Chairman Paul S. Atkins emphasized that the guidance is part of the SEC’s broader Project Crypto initiative, aimed at balancing investor protection with innovation [2]. The statement represents a departure from prior regulatory approaches that had classified some staking models as unregistered securities, potentially opening the door for more structured participation from traditional financial institutions [2]. Analysts suggest the move could lead to increased capital flows into liquid staking mechanisms, as investors and stakeholders now have a clearer legal framework to operate within [1].

The impact of this clarification is expected to be felt across the DeFi landscape, with potential increases in Total Value Locked (TVL) within liquid staking protocols. This regulatory clarity is seen as a catalyst for institutional interest and could encourage further development of staking infrastructure, particularly in protocols built on Ethereum and Solana [1]. Market participants, including entities like Jito Labs and VanEck, have been directly engaged in discussions with the SEC, indicating a constructive regulatory dialogue [1].

This development marks a significant shift in the SEC’s regulatory approach to crypto assets and may signal a more structured and predictable environment for market participants. By distinguishing between traditional staking and liquid staking, the agency is providing a clearer regulatory pathway for innovation in the DeFi sector [2]. The broader crypto market now awaits further developments as the SEC continues its efforts to refine the regulatory landscape under Project Crypto [2].

Source:

[1] SEC Clarifies Liquid Staking Isn't a Security Amid Project Crypto Push (https://coingape.com/sec-clarifies-liquid-staking-isnt-a-security-amid-project-crypto-push/)

[2] SEC: Crypto Liquid Staking Activities are Not Considered Securities (https://watcher.guru/news/sec-crypto-liquid-staking-activities-are-not-considered-securities)