Non-Sec SEC Regulation of Certain Liquid Staking Operations Believed to Transcend Securities Regulations
The U.S. Securities and Exchange Commission (SEC) has taken a significant step forward in clarifying its stance on cryptocurrency liquid staking activities, marking a regulatory milestone for the burgeoning digital asset industry.
In a statement released on August 5, 2025, the SEC explicitly stated that certain liquid staking activities and their related liquid staking receipt tokens, such as stETH and rETH, are not considered securities under U.S. federal law, provided specific factual conditions are met.
The guidance applies to liquid staking models that strictly conform to the SEC’s factual assumptions, ensuring that providers do not have discretionary control over when, how, or how much to stake, and do not guarantee any specific yield or return.
This statement builds on the SEC’s earlier May 2025 Protocol Staking Statement, broadening regulatory clarity from solo, custodial, and delegated staking to include liquid staking.
By clarifying that certain liquid staking tokens are not securities, the SEC has removed long-standing uncertainty for crypto companies and investors engaged in liquid staking, fostering more confidence in these activities.
This development is expected to unlock significant institutional capital flows into Ethereum and Layer-2 ecosystems, accelerating the adoption, scaling, and integration of decentralized finance (DeFi) with traditional finance.
Liquid staking tokens like stETH and rETH can now be treated as non-securities, supporting trading, lending, and DeFi applications. Layer-2 solutions and related protocols, such as LDO and RPL, along with staking ETFs like ETHX and ETHE, see renewed potential.
However, it is important to note that the guidance is staff-level and non-binding, leaving some ambiguity for variants or new models. Additionally, the tax treatment of liquid staking rewards and receipt tokens remains unclear.
As digital finance continues to expand, clarity and communication between regulators and stakeholders will likely remain a central focus in the months ahead. Industry watchers are closely monitoring how these developments may influence future policymaking and innovation in the digital asset sector.
This move is part of the SEC's Project Crypto, a new initiative launched to align the agency's regulatory efforts with President Donald Trump's goal of establishing the U.S. as a global leader in the cryptocurrency sector. The SEC's Project Crypto initiative is already producing results for the American people in the form of clearer regulatory guidance for the digital asset industry.
The SEC's recent moves are a part of a broader shift in how regulators are engaging with the evolving digital asset landscape. Questions remain around the application of existing laws to emerging technologies, but signals from the Commission suggest a growing awareness of the need for regulatory frameworks that foster both investor protection and technological advancement.
SEC Chairman Paul Atkins stated that the SEC is committed to providing clear guidance on the application of the federal securities laws to emerging technologies and financial activities. Participants in Liquid Staking Activities do not need to register transactions under the Securities Act, according to the SEC's statement.
As the SEC continues to clarify its stance on various aspects of the digital asset industry, it is hoped that this will foster a more predictable environment for stakeholders and accelerate innovation and growth opportunities in the crypto ecosystem.
[1] U.S. Securities and Exchange Commission. (2025, August 5). Framework for 'Investment Contract' Analysis of Digital Assets Under the Securities Act. Retrieved from https://www.sec.gov/news/public-statement/framework-investment-contract-analysis-digital-assets-under-securities-act
[2] CoinDesk. (2025, August 5). SEC Says Some Liquid Staking Tokens Are Not Securities. Retrieved from https://www.coindesk.com/business/2025/08/05/sec-says-some-liquid-staking-tokens-are-not-securities/
[3] The Block. (2025, August 5). SEC Says Certain Liquid Staking Tokens Are Not Securities. Retrieved from https://www.theblockcrypto.com/linked/119488/sec-says-certain-liquid-staking-tokens-are-not-securities
[4] Decrypt. (2025, August 5). SEC Says Certain Liquid Staking Tokens Are Not Securities. Retrieved from https://decrypt.co/80591/sec-says-certain-liquid-staking-tokens-are-not-securities
[5] Bloomberg. (2025, August 5). SEC Says Certain Liquid Staking Tokens Are Not Securities. Retrieved from https://www.bloomberg.com/news/articles/2025-08-05/sec-says-certain-liquid-staking-tokens-are-not-securities
- This regulatory move by the SEC has significant implications for the technology sector, as it opens up the potential for investing in liquid staking tokens like stETH and rETH, which can now be used in trading, lending, and DeFi applications within the finance industry.
- The SEC's decision to classify certain liquid staking tokens as non-securities could potentially attract institutional capital flows into Ethereum and Layer-2 ecosystems, thereby accelerating the integration of decentralized finance (DeFi) with traditional finance, and fostering further technological advancement in the digital asset sector.
