Guidelines on Select Staking Practices Involving Liquid Assets by the Securities and Exchange Commission
The Securities and Exchange Commission (SEC) has taken a significant step forward in clarifying its stance on liquid staking activities within the crypto asset market. In a recent statement, the SEC's Division of Corporation Finance has provided insights into the application of federal securities laws to these emerging technologies.
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Liquid staking, as explained in the statement, involves depositing crypto assets with a third-party provider or protocol to receive a "liquid staking receipt token" (SRT). This token serves as evidence of the staker's ownership of the staked assets and any rewards that accrue to them.
The SEC's Division of Corporation Finance has clarified that certain liquid staking activities, under strictly defined factual conditions, do not constitute the offer or sale of securities under Section 2(a)(1) of the Securities Act of 1933 or Section 3(a)(10) of the Securities Exchange Act of 1934. According to the statement, if the provider only performs administrative or ministerial functions, does not exercise discretion on how or when to stake, and does not guarantee or promise profits, then the liquid staking arrangement falls outside the securities laws' scope.
This stance builds on the SEC’s May 29, 2025 Protocol Staking Statement, which similarly excluded certain staking models from securities classification if they met comparable requirements regarding provider roles and user control. As a result, the SEC staff distinguishes liquid staking receipt tokens as utility tokens rather than investment contracts, reducing regulatory uncertainty for such DeFi activities.
Chairman Paul S. Atkins expressed his pleasure that the SEC's Project Crypto initiative is already producing results for the American people. He reiterated the SEC's commitment to providing clear guidance on the application of the federal securities laws to emerging technologies and financial activities.
Subscribers to the newsletter will receive updates on the SEC's Division of Corporation Finance's views regarding certain liquid staking activities. However, the newsletter does not indicate whether it will cover topics outside of securities markets and crypto assets, nor does it mention the frequency at which subscribers will receive updates.
In summary, the SEC's clear stance is that liquid staking models conforming to these strict conditions do not require registration or disclosures as securities offerings, signaling an intent to accommodate innovation without overreaching into decentralized crypto staking mechanisms. This development is a significant step forward in clarifying the staff's view about crypto asset activities.
- The newsletter covering securities markets and crypto assets may provide insights on the SEC's views about liquid staking activities, which can be an valuable resource for professionals interested in finance, investing, and technology.
- The clarification by the SEC's Division of Corporate Finance on liquid staking activities, specifically classifying some liquid staking receipt tokens as utility tokens, has implications for businesses operating in the DeFi sector, as it reduces regulatory uncertainty in this rapidly evolving field.
