SEC Clarifies Liquid Staking Tokens Are Not Securities in Landmark Guidance

The U.S. Securities and Exchange Commission (SEC) released guidance on August 5, 2025, clarifying that certain liquid staking token (LST) activities do not constitute securities offerings, offering much-needed regulatory clarity for the crypto industry [1]. Under the guidance, liquid staking activities involving the issuance of receipt tokens—which represent staked assets and can be traded without waiting for unstaking—may not require registration, provided the staking provider performs only administrative or ministerial functions [1].

This development enables institutional players to integrate LSTs into their products with greater confidence, potentially unlocking new revenue streams and expanding customer bases [1]. Mara Schmiedt, CEO of blockchain developer company Alluvial, noted that the guidance allows institutions to "confidently integrate LSTs into their products which is sure to drive new revenue streams, expand customer bases, and enable the creation of secondary markets for staked assets" [1].

Liquid staking itself involves depositing crypto assets with a third-party provider in exchange for staking receipt tokens, which can be traded or used in decentralized finance (DeFi) without the need for a lock-up period [1]. The SEC’s approach reflects a nuanced understanding of LST technology, similar to the insights shared by the Crypto Task Force during earlier engagements [1].

According to Katherine Dowling, general counsel and chief compliance officer at Bitwise, the guidance makes clear that “certain liquid staking activities do not involve securities and therefore would not be required to register” [1]. The determination hinges on the Howey test, which evaluates whether a transaction involves an investment of money in a common enterprise with the expectation of profit from the efforts of others [1].

The guidance is expected to spur innovation in the crypto market, with institutions developing new products that enhance liquidity and market participation. Retail traders could also benefit from increased access to staking options, as platforms integrate LSTs into their offerings. Schmiedt noted that retail platforms will be able to attract more users by providing seamless access to staking rewards without lock-up constraints [1].

Despite the industry's positive reception, the guidance has drawn criticism from within the SEC. Commissioner Caroline Crenshaw issued a sharp dissent, warning that the statement relies on "shaky assumptions" and offers little in terms of regulatory certainty [1]. Nevertheless, the release is viewed by many in the crypto sector as a rare regulatory win, with stakeholders hailing it as a major step forward for institutional adoption and the development of decentralized finance [1].

The guidance also comes as crypto companies continue to push for broader inclusion of digital assets in mainstream financial products. A group of Solana stakeholders, for instance, recently wrote to the SEC advocating for the inclusion of their tokens in exchange-traded funds [1].

As the landscape evolves, the SEC’s latest guidance is expected to accelerate the adoption of LSTs, fostering new opportunities for both institutional and retail participants in the digital asset ecosystem [1].

Source:

[1] SEC Guidance on Liquid Staking Tokens May Open New Avenues for Institutional Adoption and Market Growth

https://en.coinotag.com/sec-guidance-on-liquid-staking-tokens-may-open-new-avenues-for-institutional-adoption-and-market-growth/