The SEC has clarified that staking receipt tokens issued under specific administrative conditions are not securities, offering key regulatory relief to liquid staking platforms.
SEC Clarifies Regulatory Position on Liquid Staking
In a key move for the decentralized finance (DeFi) industry, the U.S. Securities and Exchange Commission (SEC) has clarified that certain liquid staking activities and associated tokens are not subject to federal securities laws, provided they meet specific criteria. The guidance, issued by the SEC’s Division of Corporation Finance, aims to delineate boundaries between administrative staking services and investment contracts.
The SEC’s clarification marks a shift toward more nuanced regulation of digital asset infrastructure. By distinguishing between administrative services and investment schemes, the agency appears to be refining its approach to crypto oversight, especially in areas involving proof-of-stake protocols.
SRTs Deemed Non-Securities in Specific Cases
The SEC’s position centers on Staking Receipt Tokens (SRTs), which represent users’ claims on staked assets and their rewards. According to the Commission, these tokens are not securities if structured as straightforward proofs of deposit and issued in a manner that doesn’t rely on the managerial or entrepreneurial efforts of a third party.
The agency applied the Howey Test, which is used to determine whether an offering constitutes an investment contract. They found that the value of SRTs depends solely on the performance of the staked crypto assets themselves. In cases where providers are limited to purely administrative tasks such as issuing, minting, and redeeming tokens, the SEC does not view these as investment vehicles.
Narrow Exemption Comes With Boundaries
While the update is a positive signal for DeFi and staking protocols, the SEC emphasized that the exemption only applies to operators with strictly defined roles. Should a provider exercise discretionary authority, such as setting staking rewards, making validator decisions, or altering the product structure, the staking activity may still fall within securities regulation.
Secondary trading of SRTs may also qualify for exemption, but only under the same narrowly defined parameters. Any deviation could trigger regulatory scrutiny and potential registration requirements.
Implications for DeFi and Future ETH ETFs
Liquid staking continues to see substantial growth, with nearly $67 billion in assets currently locked, according to DeFiLlama. The SEC’s clarification is likely to support further adoption by removing some legal ambiguity for developers and institutional participants.
This development may also pave the way for future spot Ethereum ETFs that include staking features. However, ETF issuers will still need to maintain a high degree of structural transparency and engage with regulators to remain compliant.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice
