Galaxy, a crypto investment and research firm, has partnered with Liquid Collective to provide institutions with access to Ethereum (ETH) liquid staking. Notably, this partnership comes after the Securities and Exchange Commission (SEC) clarified that staking isn’t considered a security or investment contract.
Galaxy and Liquid Collective: A Partnership Forged in Innovation
According to the announcement, Galaxy will help with over-the-counter (OTC) trading for LsETH, a token from Liquid Collective that enables Ethereum staking.
LsETH lets institutional investors earn rewards from staking ETH while keeping their funds available, meaning they don’t have to lock up their capital. Unlike traditional staking, where assets are locked for a specific time, liquid staking allows investors to receive a token for their staked asset.
This token can be used in trading, lending, or other financial activities. Furthermore, Galaxy will become a node operator in the Liquid Collective network. This role improves network security and makes the protocol more decentralized. In the future, Galaxy and Liquid Collective plan to offer liquid staking services for more than just Ethereum. Their next target is Solana staking.
It is worth noting that liquid staking has emerged as a significant innovation within the crypto industry. It offers users a way to stake their assets while maintaining liquidity. Over the years, key industry players, including MetaMask, Ankr, and MoonRock, have invested in the sector.
SEC Offers Clarity on Crypto Staking
Recall that last month, the U.S. SEC staff issued new guidance clarifying that certain common crypto staking activities do not violate existing securities laws. However, the commission has praised this development and criticized it.
On May 29, the regulator released a staff statement asserting that “Protocol Staking Activities,” specifically crypto staked in a proof-of-stake blockchain, do not require registration or fall under its exemptions. This distinction is crucial, as it places these activities outside the purview of traditional securities regulation.
Decentralization in Ethereum Staking
Last year, Vitalik Buterin, the co-founder of Ethereum, started exploring a game-changing system that spurred better decentralization of Ethereum staking. As reported by TheCoinRise, the proposed solutions penalize correlated failures among validators and recommend the introduction of incentives to discourage correlated behavior in decentralized staking on the Ethereum network.
Significantly, Buterin’s strategy reduces centralized influence and fosters greater decentralization within the Ethereum network. The possible benefits of Buterin’s proposal include incentivizing decentralization by encouraging separate infrastructure for each validator.
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