Liquid Staking Activities and Tokens Are Not Securities, Says SEC
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The SEC’s Division of Corporation Finance issued a statement on Tuesday relating to liquid staking or ‘protocol staking.’ “It is the division’s view that liquid staking activities in connection with Protocol Staking do not involve the offer and sale of securities,” within the meaning of the Securities Act of 1933 and Securities Exchange Act of 1934, it stated. The statement continued to note that liquid staking participants “do not need to register with the Commission transactions under the Securities Act.” The SEC’s Division of Corporation Finance issued a staff statement on certain liquid staking activities to provide greater clarity on the application of federal securities laws to crypto assets. https://t.co/w4plTWmAJv — U.S. Securities and Exchange Commission (@SECGov) August 5, 2025 Staking Providers Not Entrepreneurial Liquid staking allows crypto holders to deposit their assets with a provider or in a DeFi protocol and receive the equivalent in staking tokens. These tokens represent ownership of the deposited crypto, plus any staking rewards, while allowing holders to maintain liquidity without withdrawing from staking. They can also be used as collateral or in other cryptocurrency applications. Ethereum liquid staking platform Lido is one of the largest, issuing stETH tokens for staked ETH. It currently has almost 8.9 million ETH staked worth around $32 billion. The SEC defined staking tokens as ‘receipts’ for the assets staked. “A Staking Receipt Token is not a receipt for a security because the deposited Covered Crypto Asset is not a security,” it stated. Using the Howey test for investment contracts, the SEC determined that liquid staking providers only perform administrative functions rather than “entrepreneurial or managerial” efforts. They act as agents facilitating staking rather than making investment decisions, and don’t guarantee returns. However, if staking providers engage in more complex entrepreneurial activities beyond basic staking services, securities laws may…
Filed under: News - @ August 7, 2025 1:20 am