SEC Declares Some Liquid Staking Activities Are Not Securities in Key Crypto Guidance Update

The U.S. Securities and Exchange Commission (SEC) has released new guidance clarifying that certain liquid staking activities in the crypto space do not qualify as securities offerings. The announcement marks a major step toward clearer regulation for US crypto market. According to the SEC, receiving a liquid staking token as proof of ownership doesn’t always mean a security is being offered, depending on the specific details of the activity.

SEC Clarifies Liquid Staking Rules

The U.S. Securities and Exchange Commission (SEC) has released a new staff statement that offers long-awaited clarity on the treatment of liquid staking in the crypto space. The guidance, issued by the SEC’s Division of Corporation Finance, outlines the agency’s current stance on whether certain crypto staking activities fall under existing federal securities laws.

Liquid staking is a process where crypto holders “stake” their digital assets, usually through a blockchain protocol or third-party provider, and in return, receive a liquid staking receipt token. This token acts as proof of ownership of the staked assets and represents any rewards that may accumulate during the staking period.

The new SEC statement explains that, in the agency’s view, these types of transactions do not automatically qualify as securities offerings. The determination will depend on the “facts and circumstances” of each case. Specifically, the SEC noted that the activities covered in the statement do not involve 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.

SEC Chair Paul Atkins said, “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.”

This clarification is big for blockchain developers, staking service providers, and crypto investors, many of whom have operated in a grey area due to unclear regulatory guidance.