SEC Clarifies Liquid Staking Tokens Are Not Securities

The U.S. Securities and Exchange Commission (SEC) has issued guidance clarifying that liquid staking activities and associated tokens do not constitute securities under federal law, offering much-needed clarity to the crypto industry. On August 5, 2025, the SEC’s Division of Corporation Finance announced that liquid staking—where users stake their crypto assets and receive liquid tokens as receipts—does not fall under the offer or sale of securities under the Securities Act of 1933 or the Securities Exchange Act of 1934 [1]. This confirmation removes regulatory ambiguity for market participants, particularly those involved in protocols like Ethereum, which issue staking receipt tokens such as stETH, rETH, and cbETH [1].

The guidance specifies that these tokens are not considered securities, provided the underlying assets are not part of an investment contract. This distinction is crucial, as it allows entities to engage in liquid staking without the need for SEC registration or exemption [2]. The announcement reflects a more refined and practical approach to regulating the crypto industry, distinguishing between traditional staking models and liquid staking mechanisms [2]. SEC Chair Paul Atkins emphasized that the guidance is intended to clarify the boundaries of the SEC’s jurisdiction, helping to differentiate between activities that are and are not subject to its oversight [2].

Industry leaders have welcomed the SEC’s stance, noting that the clarity could accelerate innovation and adoption in decentralized finance (DeFi). The removal of regulatory uncertainty is expected to encourage broader use of liquid staking in exchange-traded products and other financial applications [1]. Analysts suggest that this development could lead to increased institutional participation in crypto markets, especially in Ethereum-based liquid staking pools [2]. It also aligns with the SEC’s recent recognition of stablecoins as a form of cash, indicating a broader effort to adapt to the evolving digital asset landscape [2].

The guidance is part of the SEC’s Project Crypto initiative, which aims to address regulatory challenges in the crypto space through a series of roundtables and stakeholder engagement. This strategic move signals a shift toward a more structured and predictable regulatory environment, which is essential for the long-term growth of the digital asset market [2]. By affirming that liquid staking is not a security, the SEC supports innovation while maintaining investor protections and legal compliance [1].

The decision underscores the SEC’s ongoing efforts to streamline the regulatory framework for crypto assets, fostering a market environment that encourages innovation without compromising compliance. As the crypto industry continues to evolve, the SEC’s approach appears to be moving toward a more nuanced understanding of how digital assets function in practice [2]. This shift could lead to increased liquidity and investment, ultimately strengthening the foundation for a more mature and regulated crypto market [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)