SEC Clarifies Liquid Staking and Receipt Tokens Not Securities Under Specific Structures

The U.S. Securities and Exchange Commission’s (SEC) Division of Corporation Finance has clarified its stance on liquid staking and related receipt tokens, indicating that these arrangements may not constitute securities offerings under specific conditions [1]. In a recent statement, the SEC outlined how liquid staking—where users deposit crypto assets and receive tokens representing their staked holdings—does not inherently involve the sale of securities, provided the underlying assets are not classified as such [1].

According to the Division, the structure of liquid staking often involves users retaining ownership of their assets, while receiving tokens that can be utilized elsewhere in the crypto ecosystem. These "staking receipt tokens" function as proof of ownership and entitlement to staking rewards, and are distinct from securities unless the deposited assets themselves are considered investment contracts [1].

The SEC emphasized that the legal criteria for a securities offering, as defined by the Howey Test, are not met in these scenarios. The Howey Test identifies an investment contract based on an investment of money in a common enterprise with an expectation of profit from the efforts of others. In the context of liquid staking, the SEC clarified that providers are not actively managing user investments but rather performing administrative functions such as staking assets or selecting node operators [1].

Crucially, the agency noted that the economic benefits users derive from staking activities stem directly from the staked assets, not from the provider’s business operations. This distinction is key in determining whether a liquid staking arrangement qualifies as an investment contract [1].

The statement also addressed the regulatory status of staking receipt tokens, confirming that they are not themselves securities unless they represent ownership in an investment contract. The value of these tokens is tied to the performance of the underlying staked assets, and their creation, distribution, and redemption are governed by protocol-based or custodial systems [1].

However, the SEC warned that any structural deviation—such as providers engaging in entrepreneurial or managerial activities—could alter the regulatory outcome. While the guidance provides a framework for compliance, it does not serve as a blanket exemption for all liquid staking arrangements [1].

The clarification was part of broader regulatory efforts under SEC Chairman Paul Atkins’ “Project Crypto,” an initiative launched on July 31 to modernize financial regulations for digital assets and promote on-chain financial activity [1]. Speaking at the America First Policy Institute, Atkins outlined plans to bring crypto innovation back to the U.S. and establish clearer rules for digital asset trading [1].

This development marks a significant step in the SEC’s approach to crypto regulation, offering clarity for market participants while maintaining a cautious stance on structures that might blur the line between utility tokens and securities.

Source: [1] SEC Says Liquid Staking and Receipt Tokens May Not Be Securities Under Certain Structures (https://cryptonews.com/news/sec-says-liquid-staking-and-receipt-tokens-may-not-be-securities-under-certain-structures/)