SEC Clarifies Liquid Staking is Not a Security

Key Highlights

• SEC clears that certain liquid staking activities are not securities
• SEC’s Division of Corporation Finance stated that such activities do not require registration, as long as providers do not promise fixed returns or function as investment contracts.
• This statement could open the door for a liquid staking token-based crypto ETFs

On August 5, the U.S. Securities and Exchange Commission (SEC) released an official statement on liquid staking, which sparked euphoria in the crypto community.

In the statement, the SEC made clear that “the liquid staking activities do not involve the offer and sale of securities within the meaning of Section 2(a)(1) of the Securities Act of 1933 or Section 3(a)(10) of the Securities Exchange Act of 1934.” However, the SEC mentioned that the deposited Covered Crypto Assets are part of or subject to an investment contract.

“Under my leadership, the SEC is committed to providing clear guidance on the application of the federal securities laws to emerging technologies and financial activities,” Chairman Paul S. Atkins stated in a press release. “Today’s staff statement on liquid staking is a significant step forward in clarifying the staff’s view about crypto asset activities that do not fall within the SEC’s jurisdiction. I am pleased that the SEC’s Project Crypto initiative is already producing results for the American people.”

What’s the SEC’s View on Liquid Staking Activities and Staking Receipt Tokens

The U.S. Securities and Exchange Commission (SEC) has clarified that liquid staking activities—where users stake tokens and receive liquid staking tokens (like stETH or jSOL) in return—do not qualify as securities offerings under federal law. 

In an official statement, the SEC’s Division of Corporation Finance stated that these activities do not require registration with the Commission, as long as providers do not promise fixed returns or function as investment contracts.

Additionally, the SEC confirmed that staking receipt tokens (such as those issued by platforms like Lido or Jito) are not considered securities unless the underlying staked assets are part of an investment contract. 

This means liquid staking providers and secondary market traders do not need to register these transactions with the SEC, removing a major regulatory hurdle for decentralized finance (DeFi).

This decision provides much-needed clarity for the crypto industry, which will encourage innovation in staking services while maintaining compliance with securities laws.

Why This Matters for the Solana and Ethereum Communities

Liquid staking allows users to lock up their tokens to support blockchain networks while still using them in DeFi applications. Before this ruling, there were fears that staking services could be classified as securities, requiring strict regulations. 

The SEC’s latest statement clarifies that as long as providers don’t promise fixed returns, these activities fall outside securities laws. This is a major win for platforms like Lido and Jito, which can now operate more freely.

Ethereum, with over 35.8 million ETH in liquid staking, and Solana, with 362.2 million SOL, stand to benefit largely as institutional investors gain confidence in these markets.

The move removes long-standing regulatory uncertainty, paving the way for growth in decentralized finance (DeFi) and increasing the likelihood of staking-enabled exchange-traded funds (ETFs).

SEC Statement Opens Door for LST-Based ETFs

The SEC’s decision has also sparked optimism about new ETFs that include staking rewards. While Bitcoin and Ether ETFs are already approved, staking features have been a sticking point. 

Now, with clearer rules, firms like BlackRock and Grayscale are pushing to add staking to their Ethereum ETF proposals. Analysts believe Solana ETFs could also get fast-tracked, with possible approvals by late 2025. These ETFs could offer yields between 1.9% and 2.2%, making them more attractive than Bitcoin ETFs, which don’t provide staking rewards.

With regulatory hurdles easing, experts predict a surge in institutional investment. Some estimates suggest Solana alone could see $3–6 billion in new capital within months of ETF approvals.

However, risks like smart contract vulnerabilities remain, and the SEC is still reviewing whether staking ETFs comply with investment laws. Despite these challenges, the broader crypto market is optimistic. This ruling not only validates liquid staking but also positions Ethereum and Solana as leading contenders for mainstream financial products, potentially reshaping the future of crypto investing.