The SEC's new guidance in the Crypto Project clarifies that liquid staking activities do not require registration under securities law.
The U.S. Securities and Exchange Commission (SEC) has released new guidance affirming that certain liquid staking activities do not constitute securities transactions, marking a significant step forward in this agency's more crypto-friendly phase. According to the document released on Tuesday, individuals and organizations participating in liquid staking activities will not have to register under securities law regulations, including protocols such as Lido, Marinade Finance, JitoSOL, and Stakewise.
The SEC affirms that the offering and trading of Staking Receipt Tokens as described in the statement 'does not constitute an offer and sale of securities' under Section 2(a)(1) of the Securities Act or Section 3(a)(10) of the Securities Exchange Act, unless the staked crypto assets are part of an investment contract or subject to the regulation of an investment contract.
This decision is part of the 'Crypto Project' initiative announced by SEC Chairman Paul Atkins last week, aimed at updating regulations regarding the issuance of crypto assets, custody, trading, and other related activities. Under President Donald Trump, the SEC is entering a new, more crypto-friendly era, following its declaration in May that staking digital assets under a proof-of-stake model does not constitute securities transactions.
Paving the way for integrated Ethereum staking ETFs
Chairman Atkins clarified that the new statement specifically applies to the staking of crypto assets through software or service providers, and receiving liquid staking receipt tokens, which represent ownership rights to the staked assets as well as corresponding rewards. He stated that this is 'a significant step in clarifying the SEC's jurisdiction and identifying crypto asset activities that are not subject to securities law.'
Nate Geraci, President of NovaDius Wealth, noted that the new guidance could remove the final barrier for the SEC to approve staking in spot Ethereum ETFs. He explained that liquidity staking tokens would be used to manage liquidity in spot ETH ETFs, which has been a major concern for the SEC in the past.
The impact of this statement extends beyond the scope of liquid staking. Jason Gottlieb, a partner at Morrison Cohen law firm, believes the decision is groundbreaking with far-reaching legal implications for many other aspects of the crypto asset space, particularly receipt tokens in cross-chain bridges or similar wrapped tokens. By the same logic, these tokens are merely receipts of ownership and cannot be considered securities unless there are additional factors.
Immediate positive market reactions have emerged as several institutions, including BlackRock, are now considering adjustments to their listed Ethereum ETFs to allow for integrated staking activities following the SEC's clear move. This could provide significant additional revenue for ETFs through staking rewards while enhancing the product's appeal to institutional investors.
