SEC Grants Clarity Liquid Staking Tokens Not All Securities

The U.S. Securities and Exchange Commission (SEC) has provided long-awaited regulatory clarity regarding liquid staking tokens (LSTs), stating that not all such tokens are considered securities under federal law [2]. This guidance, released in a staff statement, clarifies that under certain conditions, the issuance and exchange of staking receipt tokens—digital claims on staked assets and rewards—do not constitute the offer or sale of securities [1]. This marks a pivotal moment for the rapidly expanding liquid staking segment of the crypto market, which currently holds over $67 billion in total value locked, with Ethereum accounting for more than $50 billion [2].

The decision specifically addresses scenarios where users stake their crypto assets through platforms such as Lido, JitoSOL, and Stakewise, and receive derivative tokens that represent their staked positions. According to the SEC, the key factor is whether the underlying staked asset itself qualifies as an investment contract. If it does not, then the staking receipt token likely does not either [1]. This nuanced approach reflects the SEC’s ongoing efforts to distinguish between different categories of crypto assets under its regulatory framework [5].

The guidance is part of a broader shift in tone under SEC Chair Gary Gensler, who has prioritized the launch of “Project Crypto”—a comprehensive initiative to reassess the agency’s oversight of digital assets, including trading, custody, and fund structures [2]. This aligns with wider developments in Washington, including the passage of the GENIUS Act and proposed reforms around stablecoins and central bank digital currencies (CBDCs) [2].

The move is also likely to support industry initiatives, particularly those involving Ethereum and Solana-based staking. Firms such as BlackRock, VanEck, and Bitwise have all proposed or are considering updates to their ETFs to include staking and liquid staking strategies, which may now face fewer regulatory roadblocks [2]. Analysts suggest that this clarity could encourage greater institutional participation in the market, as regulatory certainty often fosters confidence among traditional investors [4].

However, the SEC has been careful to emphasize that its guidance does not apply universally. The classification of a token as a security—or not—depends on the specific facts and circumstances surrounding its issuance and use [5]. This reaffirms the agency’s longstanding position that a case-by-case analysis is necessary to determine a token’s legal status [1].

The timing of the announcement is also significant, coming amid recent high-profile security incidents in the DeFi and crypto lending spaces. While the SEC has not yet addressed broader issues of cybersecurity and fraud in its statement, the agency’s recent comments suggest a growing willingness to engage with the industry in a collaborative manner [7]. This may signal a shift toward a more structured, innovation-friendly regulatory environment.

For now, the SEC’s position represents a key milestone in the evolving relationship between regulators and the crypto sector. It offers a degree of legal certainty to market participants while underscoring the need for continued engagement between the industry and enforcement agencies. As Chair Gensler noted, the statement on liquid staking is “just the beginning” in what promises to be an ongoing dialogue about the future of digital assets [2].

Source:

[1] SEC Clarifies Securities Status for Liquid Staking Tokens, BeInCrypto, https://beincrypto.com/sec-liquid-staking-tokens-rule-clarification/

[2] SEC Clears Path For Liquid Staking, Says Not All Tokens Are Securities, FinanceFeeds, https://financefeeds.com/sec-clears-path-for-liquid-staking-says-not-all-tokens-are-securities/

[4] SEC says liquid staking activities and tokens are not securities, Invezz, https://invezz.com/news/2025/08/05/sec-says-liquid-staking-activities-and-tokens-are-not-securities/

[5] Project Crypto Explained: The SEC And CFTC's Push, FinanceFeeds, https://financefeeds.com/project-crypto-explained-the-sec-and-cftcs-push/

[7] Web3 is Going Just Great, https://www.web3isgoinggreat.com/