SEC Affirms Liquid Staking Not a Security Under U.S. Law

The U.S. Securities and Exchange Commission (SEC) has issued a staff-level clarification stating that certain liquid staking activities and associated tokens do not constitute securities under U.S. law, offering much-anticipated regulatory clarity to participants in the crypto staking market. On August 5, 2025, the SEC’s Division of Corporation Finance confirmed that liquid staking—particularly when tied to protocol staking—does not involve the offer or sale of securities under the Securities Act of 1933 or the Securities Exchange Act of 1934 [1]. This guidance suggests that entities and individuals engaging in these activities are not required to register with the SEC or seek exemptions for their operations [2].

The clarification also addresses staking receipt tokens, such as stETH, rETH, and cbETH, stating that their issuance and subsequent trading are not considered securities, provided the underlying crypto assets are not part of an investment contract [2]. This removes a key layer of uncertainty for market participants and could encourage broader adoption of liquid staking mechanisms.

The announcement is seen as a significant development in the SEC’s evolving approach to crypto assets. SEC Chair Paul Atkins emphasized the importance of the statement, noting that it represents a clear effort to delineate between crypto activities that fall under the SEC’s jurisdiction and those that do not [2]. The guidance aligns with the agency’s recent recognition of stablecoins as a form of cash and its ongoing efforts to adapt to the rapidly changing digital asset landscape.

Industry experts have highlighted the potential benefits of the decision, including increased market confidence and greater participation in Ethereum-based liquid staking pools. The move is also expected to attract more institutional interest, as regulatory clarity often serves as a prerequisite for broader adoption and investment [2].

The SEC’s position marks a departure from previous rulings that classified certain staking models as unregistered securities. This new framework provides a clearer distinction between traditional staking models and liquid staking, offering a more nuanced regulatory approach. Analysts suggest that such clarity can foster innovation and growth in the DeFi space, provided that operators continue to comply with relevant legal standards [2].

The statement reflects a broader regulatory strategy aimed at streamlining the crypto landscape, particularly as the U.S. administration continues to explore ways to support innovation while maintaining investor protections. The SEC has also announced plans to host a series of "crypto roundtables" to further engage with stakeholders and refine its regulatory framework.

This shift in stance could have a cascading effect on the market, with liquidity flows expected to increase as participants gain confidence in the legal status of liquid staking. The SEC’s decision to affirm that these activities do not constitute securities is a significant step toward a more defined and structured regulatory environment for crypto markets [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)