SEC Liquid Staking Guidance a Win For Crypto

The U.S. Securities and Exchange Commission made a major announcement on August 5, 2025, that could change the crypto industry.

The agency said that certain liquid staking activities and their related tokens are not securities under federal law.

This decision removes years of uncertainty for crypto companies and investors who use liquid staking. The announcement comes from the SEC’s Division of Corporation Finance and marks a big shift in how regulators view crypto staking.

What Is Liquid Staking?

Liquid staking lets crypto holders earn rewards from staking while keeping their assets available for other uses. Normally, when people stake their crypto tokens, those tokens get locked up and cannot be traded or used elsewhere.

With liquid staking, users deposit their crypto with a service provider and receive “staking receipt tokens” in return. These receipt tokens prove ownership of the staked crypto and any rewards earned. Users can trade these receipt tokens or use them in other crypto applications while their original tokens stay staked.

Popular liquid staking tokens include stETH (staked Ethereum) and rETH (Rocket Pool ETH). The SEC’s statement explains that these tokens work like receipts for deposited assets.

SEC’s Legal Analysis

The SEC used the Howey test to decide whether liquid staking counts as a securities transaction. This test looks at whether there is an investment of money in a common enterprise with profits expected from the work of others.

The agency concluded that liquid staking providers only do administrative work, not the kind of business management that would make something a security. These providers do not decide when or how much to stake for users. They also cannot guarantee specific rewards.

SEC Chairman Paul Atkins said in a press release: “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.”

Industry Response

Crypto companies welcomed the news after years of regulatory uncertainty. The guidance came after industry groups including Jito Labs, Bitwise, Multicoin Capital, VanEck, and the Solana Foundation asked the SEC for clarity on liquid staking rules.

Rebecca Rettig, legal advisor at Jito Labs, told reporters: “It’s what we’ve been waiting for. Liquid staking does not create a securities transaction as there’s no entrepreneurial or managerial activities.”

The decision could boost institutional investment in crypto. Many large investors stayed away from staking because of unclear rules. Now they have more certainty about what is allowed under U.S. law.

Important Limitations

The SEC’s guidance comes with strict conditions. Companies can only benefit from this ruling if they follow specific rules about how they operate their liquid staking services.

Providers must stick to administrative tasks only. They cannot make investment decisions for users or guarantee specific returns. The receipt tokens must truly represent ownership of deposited crypto assets, not independent investments.

The SEC warned that any activities going beyond basic administrative work could still be considered securities. This means companies need to carefully review their business models to make sure they qualify for this safe harbor.

The agency also noted this guidance does not cover restaking, which is a different type of crypto activity that lets staked assets be used on additional networks.

Part of Broader Crypto Initiative

This announcement is part of Chairman Atkins’ “Project Crypto,” a plan launched in July 2025 to modernize securities rules for digital assets. The initiative aims to bring more crypto innovation back to America with clearer regulations.

Source: sec.gov

The new approach is different from previous SEC leadership under Gary Gensler, which often used enforcement actions to regulate crypto companies. Atkins has promised a more collaborative approach that provides guidance upfront rather than punishing companies after the fact.

The liquid staking guidance builds on earlier SEC statements about other types of crypto staking that were also deemed not to be securities transactions. This creates a clearer picture of what crypto activities are allowed under current U.S. law.

Market observers see this as part of a broader shift toward crypto-friendly policies under the current administration. The guidance could pave the way for new crypto products like staking-enabled ETFs that were previously difficult to approve.

Looking Forward

This SEC decision provides important clarity for the multi-billion dollar liquid staking market. Major protocols like Lido Finance and Rocket Pool can now operate with more confidence about their regulatory status.

However, the crypto industry should not see this as a blanket approval for all staking activities. Companies must carefully ensure their operations match the specific conditions outlined in the SEC’s guidance.

The decision removes a major obstacle for crypto innovation in the United States and could lead to increased investment and development in the staking sector.