SEC Clarifies Liquid Staking Not a Security Under Federal Laws

The U.S. Securities and Exchange Commission (SEC) has issued a formal clarification on August 5, 2025, stating that certain liquid staking activities do not constitute securities transactions under federal securities laws [1]. This guidance comes from the SEC’s Division of Corporation Finance, which emphasized that staking through a protocol and receiving a liquid staking receipt token typically does not involve the offer or sale of securities [2]. The clarification is expected to reduce regulatory uncertainty for decentralized finance (DeFi) platforms and staking protocols, particularly those built on Ethereum and Solana [3].

The statement specifically addresses the legal interpretation of liquid staking, a process in which users lock up crypto assets to validate transactions and earn rewards while retaining liquidity through a tokenized receipt. The SEC highlighted that the classification of such activities depends on specific facts and circumstances, and in the case of the protocols discussed, these mechanisms do not meet the definitions of a securities offering under the Securities Act of 1933 or the Exchange Act of 1934 [4]. Commissioner Hester Peirce, a long-time advocate for crypto-friendly regulation, confirmed this stance, stating that liquid staking with protocol involvement does not involve the sale of securities [5].

This clarification is part of the SEC’s broader “Project Crypto” initiative, aimed at enhancing regulatory clarity for emerging crypto technologies while avoiding unnecessary stifling of innovation. The initiative has produced several outcomes, including this statement, which is expected to provide stability for market participants [6]. The guidance is particularly significant given the recent enforcement actions against staking platforms and exchanges that altered market dynamics.

Industry analysts suggest the SEC’s position may encourage increased participation in liquid staking protocols and stimulate the development of new staking-based products [7]. By reducing compliance burdens and legal risks, the agency is indirectly supporting the growth of DeFi and layer 1 assets. This regulatory approach also aligns with the SEC’s efforts to balance investor protection with technological progress [8].

The clarification has been widely covered by crypto media, with outlets like Cointelegraph and CoinGape noting its potential to reshape the regulatory landscape [9]. The SEC’s measured and pragmatic approach is seen as a step toward defining clearer boundaries for the crypto industry without imposing overly broad interpretations of securities laws [10].

The impact of this guidance is likely to be felt across the DeFi ecosystem, particularly in staking derivatives and liquidity provision models. The reduction of regulatory ambiguity may encourage institutional participation and foster innovation in staking-based financial instruments. This development underscores the SEC’s evolving role in shaping the regulatory environment for digital assets.

Source:

[1] SEC.gov (https://www.sec.gov/newsroom/press-releases/2025-104-securities-exchange-commission-division-corporation-finance-issues-staff-statement-certain-liquid)

[2] SEC.gov (https://www.sec.gov/newsroom/speeches-statements/peirce-staking-sequel-080525)

[3] CoinGape (https://coingape.com/sec-clarifies-liquid-staking-isnt-a-security-amid-project-crypto-push/)

[5] Cointelegraph (https://cointelegraph.com/news/sec-certain-liquid-staking-activities-securities-laws)

[9] Cryptonews (https://cryptonews.com/news/sec-says-liquid-staking-and-receipt-tokens-may-not-be-securities-under-certain-structures/)