The SEC has published a staff statement indicating that liquid staking does not violate securities laws, as long as certain conditions are met.
Relief for the Sector
For now, the axe won’t fall. In a landscape where US crypto regulation shifts with the SEC’s stance, a new staff statement stirs the market: liquid staking does not breach securities laws. A clarification that could alter the game for billions in assets.
Tuesday, the SEC’s Division of Corporation Finance released a statement on a hot topic: liquid staking, a practice allowing cryptocurrency holders to stake them through a third-party service while receiving a representative token usable in DeFi.
No reporting obligations under securities laws for participants, whether service providers or simple depositors. In short, no lawsuits, no regulatory hurdles, as long as certain conditions are met.
Not a law. Not a regulator’s decision as a whole. But a strong signal, crucial in a regulatory stability-seeking ecosystem.
$67 Billion at Stake
Why is this so vital? Because liquid staking isn’t a niche practice.
Currently, nearly $67 billion is locked in liquid staking protocols, as per DefiLlama data. Lido alone holds $31.7 billion, a key player in Ethereum staking.
Behind Lido, giants like Rocket Pool or Jito are found. Their tokens briefly responded to the SEC’s announcement, showing a slight uptick… before dipping. But the core lies in: immediate regulatory threat diminishes.
A Red Line Not to Cross
Not everything is permitted, though. The text recalls a crucial boundary: deposited assets must not be part of an investment contract. In simpler terms, staking service must not be marketed as a yield promise hinging on a third party’s efforts.
The provider’s role is pivotal here: acting solely as a technical agent, sans decision-making or initiative on the depositor’s assets. No strategy, no active management, just delegation.
The SEC even states these services greatly resemble custodial arrangements outlined in a previous statement on traditional staking.
A Truce, Yet Not a Total Victory
This staff statement holds no binding power. It can be amended, nuanced, or even disregarded by another SEC department or a future lawsuit. But in a climate where every regulator’s word is scrutinized, such a stance is a breath of fresh air for the industry.
For staking protocols, it’s a regulatory window of opportunity. For investors, a confirmation that their liquid tokens are not, at this stage, targeted.
And for the entire Web3 ecosystem, a clear message: liquid staking still has a place in American decentralized finance.
