SEC Clarifies Liquid Staking Tokens as Receipts Not Securities Under Specific Conditions

The U.S. Securities and Exchange Commission (SEC) has released updated guidance stating that liquid staking tokens (LSTs) should be treated as receipts rather than securities under certain conditions. This comes as part of the SEC’s ongoing effort to provide clarity on the regulatory status of staking and yield-generating tokens in the digital asset space [1].

According to the SEC’s Division of Corporation Finance, liquid staking occurs when users deposit “covered crypto assets” with a protocol or service provider and receive LSTs in return. These tokens serve as proof of ownership of the staked assets and any associated rewards. The SEC clarifies that such tokens, and the activities surrounding them, do not automatically constitute a securities offering, provided they function as receipts and not as investment contracts [2].

The guidance explains that providers of liquid staking services typically play an administrative or ministerial role, facilitating staking without exerting entrepreneurial or managerial efforts. As a result, the SEC does not consider these arrangements to involve investment contracts under the Howey test. Furthermore, providers do not set or guarantee staking rewards, which is a key factor in determining whether a token qualifies as a security [3].

Importantly, secondary market trading of LSTs also does not require registration under the described conditions. However, the SEC explicitly warns that this guidance applies only to providers that operate within the outlined framework and do not extend to those that offer additional services or structures that deviate from the administrative model [4].

This update builds on an earlier May 2025 staff statement that addressed other staking arrangements, such as self, delegated, custodial, and non-custodial staking. That guidance also clarified that certain features—such as early withdrawals, slashing protection, or reward bundling—do not automatically convert staking into a securities offering [5].

While the guidance provides much-needed clarity for market participants, it is not a universal exemption. The SEC continues to emphasize the importance of a fact-specific analysis and cautions that not all liquid staking models will qualify for the receipt classification. Projects must ensure their structures align with the outlined conditions to avoid regulatory risks [6].

The timing of the guidance is significant, as the crypto industry faces increasing scrutiny and seeks to develop compliant business models. The SEC’s approach appears to aim for a balance between fostering innovation and maintaining investor protections. By defining the boundaries of what constitutes a security in the context of liquid staking, the agency is helping to shape a more predictable regulatory environment [7].

Sources:

[1] Securities and Exchange Commission Division of Corporation Finance Issues Staff Statement on Certain Liquid Staking Activities (https://www.sec.gov/newsroom/press-releases/2025-104-securities-exchange-commission-division-corporation-finance-issues-staff-statement-certain-liquid)

[2] SEC Says Certain Liquid Staking Models Not Securities (https://news.bitcoin.com/sec-says-certain-liquid-staking-models-not-securities/)

[3] Response to Staff Statement on Certain Liquid Staking Activities (https://www.sec.gov/newsroom/speeches-statements/crenshaw-statement-liquid-staking-080525)

[4] SEC Grants Clarity Liquid Staking Tokens Not All Securities (https://www.ainvest.com/news/sec-grants-clarity-liquid-staking-tokens-securities-2508/)

[5] SEC Clarifies Liquid Staking Isn't Security Under Protocol-Driven Structures (https://www.ainvest.com/news/sec-clarifies-liquid-staking-isn-security-protocol-driven-structures-2508/)

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

[7] US SEC Says Certain Liquid Staking Activities Fall Outside of Securities Laws (https://cointelegraph.com/news/sec-certain-liquid-staking-activities-securities-laws)