On August 5, 2025, the Securities and Exchange Commission's Division of Corporation Finance issued a staff statement addressing a rapidly evolving area of crypto finance: liquid staking. The statement—released under the SEC's Project Crypto initiative—marks a notable step toward clarifying the agency's application of federal securities laws to certain crypto asset activities.
What Is Liquid Staking?
Liquid staking refers to the process of committing crypto assets to a proof-of-stake blockchain network through a protocol or third-party provider while receiving in return a "liquid staking receipt token." This token evidences the staker's ownership of the underlying assets as well as their right to receive rewards generated by staking. Unlike traditional staking, which locks assets until the end of the staking period, liquid staking allows token holders to retain liquidity and transferability while continuing to earn rewards.
SEC Staff's View
The Division of Corporation Finance clarified that—depending on the facts and circumstances—liquid staking activities as described in the statement do not necessarily involve the offer and sale of securities under either the Securities Act of 1933 or the Securities Exchange Act of 1934.
This position represents a careful attempt to distinguish certain liquid staking activities from arrangements that might otherwise raise concerns under the federal securities laws, particularly where receipt tokens function more like transferable receipts than investment contracts.
In the words of Chairman Paul S. Atkins:
"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."
Why This Matters
For industry participants—protocol developers, service providers, and institutional investors alike—the statement provides incremental clarity on an area long clouded by regulatory uncertainty. While the SEC has frequently taken the position that many staking and yield products involve securities transactions, this staff guidance signals recognition that certain forms of liquid staking may be outside the agency's jurisdiction.
That said, the familiar refrain applies: everything depends on the facts and circumstances. Questions remain about which models qualify for this treatment, particularly where intermediaries pool assets, exercise discretion, or market staking tokens in ways that resemble investment schemes.
Looking Ahead
The staff's statement reflects the SEC's growing willingness to draw principled lines in crypto regulation, distinguishing between activity that falls squarely within the securities regime and activity that may not. Market participants should not mistake this for a wholesale safe harbor, but rather a signpost indicating how the Commission may analyze liquid staking under existing law.
As regulatory frameworks continue to evolve, issuers, intermediaries, and investors would be wise to proceed with caution—seeking counsel on the specific structuring of staking and liquid staking programs. The SEC's position may continue to evolve, but for now, this staff statement offers some much-needed daylight in an otherwise murky area.
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