SEC declares liquid staking is outside of securities laws in latest guidance following 'Project Crypto' initiative

Certain liquid staking activities do not involve securities, the U.S. Securities Exchange Commission said in its latest guidance as it delves into its crypto-friendly era.

In guidance released on Tuesday, the SEC said that people engaged in liquid staking activities do not have to register with the agency under the securities laws. Liquid stakers that could be exempted from securities laws include Lido, Marinade Finance, JitoSOL and Stakewise.

"It also is the Division’s view that the offer and sale of Staking Receipt Tokens, in the manner and under the circumstances described in this statement, do not involve the offer and sale of securities within the meaning of Section 2(a)(1) of the Securities Act or Section 3(a)(10) of the Exchange Act, unless the deposited Covered Crypto Assets are part of or subject to an investment contract," the SEC said.

Under the Trump administration, the SEC has entered a new age, geared toward being more welcoming toward crypto. Last week, SEC Chair Atkins debuted "Project Crypto" to update the agency's rules when it comes to crypto distributions, custody, and trading, among other areas. The SEC has also taken a stance on proof-of-stake staking activities and said in May that it does not constitute securities transactions.

Chairman Paul Atkins said that specifically applied to staking crypto via a software protocol or service provider and then receiving a "liquid staking receipt token' to evidence the staker’s ownership of the staked crypto assets and any rewards that accrue to them."

"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," he added. "I am pleased that the SEC’s Project Crypto initiative is already producing results for the American people."

Nate Geraci, president of NovaDius Wealth, said the SEC's guidance could move forward the SEC's approval of staking in proposed spot Ethereum exchange-traded funds.

"Think last hurdle in order for SEC to approve staking in spot eth ETFs," Geraci said in a post on X. "The reason? Liquid staking tokens will be used to help manage liquidity w/in spot eth ETFs, something that was a concern for SEC."

Jason Gottlieb, a partner at Morrison Cohen, said the SEC's statement is pivotal. 

"The Staff’s statement on liquid staking tokens has significant implications for other cryptocurrency matters as well, particularly including receipt tokens for cross-chain bridging or other similar wrapped tokens, which by the same logic are simply receipts, and cannot, without more, be securities," Gottlieb said. 

Some firms, including BlackRock, are looking to change their listed Ethereum ETFs to allow staking.

Updated at 7:05 p.m. UTC on Aug. 5 to include details