The crypto industry welcomes the U.S. Securities and Exchange Commission (SEC)'s latest guidance on liquid staking, viewing it as a significant advancement for decentralized finance and the adoption of digital assets by institutions.
The guidance issued by the SEC indicates that under specific conditions, liquid staking activities and the receipt tokens generated from them do not constitute a securities issuance.
Mara Schmiedt, CEO of Alluvial, stated, 'Institutions are now able to confidently integrate liquid staking tokens (LST) into their products, which will undoubtedly drive new revenue streams, expand their customer base, and create a secondary market for staked assets.'
Liquid staking is the process of depositing crypto assets with a third-party provider and receiving staking receipt tokens in return. These receipt tokens can be traded or used in DeFi without waiting for the funds to be unlocked.
Although the crypto industry supports this guidance, there are also critical voices within the SEC. Inside the SEC, Commissioner Caroline Crenshaw warned that this statement relies on unstable assumptions and provides limited regulatory certainty.
Katherine Dowling, Chief Legal Officer of Bitwise, stated, 'The SEC clearly points out that certain liquid staking activities do not involve securities and therefore do not require registration.'
If the activity only involves 'management or administrative' functions, such as issuing tokens that represent ownership of staked assets, it may not trigger securities registration requirements.
With the widespread adoption by institutions, retail traders may benefit and influence the provision of DeFi services. Retail platforms will attract more users, providing unlocked access to staking rewards, while the ecosystem will benefit from increased liquidity and innovation.