On August 5, 2025, the Division of Corporation Finance of the U.S. Securities and Exchange Commission ("SEC") issued a statement ("Statement") providing interpretive clarity on the application of federal securities laws to certain liquid staking activities involving crypto assets.
"Liquid staking" refers to a process in which holders of crypto assets deposit their assets with a third-party protocol staking service provider and receive newly minted crypto assets in return.
Key Regulatory Clarifications
No Securities Transaction. The SEC's view is that "Liquid Staking Activities," as defined in the Statement, do not involve the offer or sale of securities under the Securities Act or the Securities Exchange Act. These activities are characterized as administrative or ministerial, lacking the entrepreneurial or managerial efforts required under the "investment contract" test established in SEC v. W.J. Howey Co. ("Howey Test").
Staking Receipt Tokens Are Not Securities. The SEC considers that "Staking Receipt Tokens," as defined in the Statement, are not securities. They function as receipts evidencing ownership of the deposited crypto assets, which themselves are not securities. The tokens do not generate rewards independently; rather, rewards are derived from the underlying protocol staking activities.
No Registration Requirement. "Liquid Staking Providers," as defined in the Statement, and participants in the minting, issuing, and redeeming of the "Staking Receipt Tokens" are not required to register these transactions with the SEC, provided the activities remain within the administrative and ministerial scope outlined in the Statement.
Scope Limitations. The Statement does not extend to activities that go beyond administrative or ministerial functions. Similarly, if the underlying crypto assets or the tokens are offered as part of an investment contract, a separate analysis under the Howey Test would be required.
Implications
The Statement provides important regulatory clarity as far as "Liquid Staking Activities" and the issuance of "Staking Receipt Tokens" are concerned.
The Statement also echoes a previous statement, through which the SEC clarified that certain crypto-asset staking activities in connection with proof-of-stake networks were not securities transactions, as discussed in our recent Alert, "Crypto Staking: SEC Staff Clarifies Non-Security Status for Certain Protocol Activities."
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
