- The SEC confirmed that liquid staking tokens are not considered securities.
- The statement reverses actions from the previous SEC chair, Gary Gensler, who targeted similar crypto products.
- Liquid staking is the second-largest segment in decentralized finance, with over $66 billion in assets.
- The largest protocol, Lido, controls about half of the liquid staking market.
- The SEC clarified that its guidance does not apply to certain protocols or staking arrangements that act like securities.
The U.S. Securities and Exchange Commission (SEC) announced on Tuesday that liquid staking tokens do not qualify as securities such as stocks or bonds. This update comes as the agency continues to outline its approach to cryptocurrencies and blockchain activity.
According to the SEC, liquid staking tokens function more like receipts confirming a user’s deposit rather than investment contracts. The new chair, Paul Atkins, said the move is part of a broader effort to update and clarify crypto regulations in the United States.
“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,” Atkins stated. He introduced “Project Crypto,” an initiative aimed at revising past regulatory approaches and possibly boosting connections between traditional finance and blockchain technology.
Under former chair Gary Gensler, the SEC pursued a stricter stance, labeling many digital assets as securities and filing lawsuits against multiple crypto companies for unregistered offerings, including the developer of MetaMask, ConsenSys. Last year, the SEC alleged that some liquid staking services, like Lido and Rocket Pool, were dealing in unregistered securities. This lawsuit was dropped in February after Gensler’s leadership ended.
A recent SEC statement agreed with arguments made by industry lawyers and advocacy groups, stating that liquid staking providers do not make managerial decisions for depositors and serve only as intermediaries. The agency noted that the tokens, now often called “staking receipt tokens,” are not, by themselves, securities. The guidance excludes certain arrangements, such as “restaking” protocols or any tokens that provide rights similar to traditional securities, including Passive income or ownership in business profits or assets.
In liquid staking, users deposit cryptocurrency into a protocol, which then stakes these assets to support network security and help verify transactions. The protocol issues tokens that act as IOUs, allowing users to participate in other decentralized finance (DeFi) activities while still earning staking rewards. Leading protocol Lido holds over $31.6 billion in deposits, accounting for about half of the liquid staking market.
Most blockchains today use “proof-of-stake” systems, requiring coins to be locked up (“staked”) for transaction validation and network safety. Liquid staking protocols give users more flexibility by issuing tokens that can be used even while their original assets are staked.
The SEC’s full statement can be accessed here.
✅ Follow BITNEWSBOT on Telegram, Facebook, LinkedIn, X.com, and Google News for instant updates.
Previous Articles:
- Polygon (POL) Jumps 9% Amid Volume Surge, Outperforms Market
- Jim Cramer Sees Amazon Stock Dip as Buying Opportunity Despite Q3 Warning
- Stablecoin Market Surges After Trump Signs GENIUS Act Into Law
- Galaxy Digital Sells 80,000 BTC as Firms Boost Bitcoin Demand
- ClickFix Social Engineering Scam Surges, Replaces Browser Threats
