- SEC says liquid staking and LST tokens aren't securities under US law.
- Projects and users don't need to register liquid staking transactions.
- The move boosts institutional confidence but faces some internal dissent.
The US Securities and Exchange Commission (SEC) has issued a position statement on liquid staking, clarifying that these activities and the tokens issued by such protocols do not constitute a securities offering. According to this guidance, both projects issuing liquid staking tokens (LSTs) and users who hold or trade these assets are not required to register these transactions.
According to DeFiLlama, the total value locked (TVL) in liquid staking protocols across multiple networks is nearly $67 billion:
The SEC has previously issued similar guidance on staking, noting that while these recommendations are not binding in enforcement actions, they reflect the regulator’s overall stance.
The move has been welcomed by many in the industry. Alluvial CEO Mara Schmidt told Cointelegraph, “Institutions can now confidently integrate LSTs into their products which is sure to drive new revenue streams, expand customer bases, and enable the creation of secondary markets for staked assets.”
However, not all SEC Commissioners agreed with the new guidance. Commissioner Caroline Crenshaw argued the recommendations were based on "shaky facts," said they "only muddy the waters," and included legal conclusions that might not be applicable in practice.
Additionally, the SEC's decision comes as global regulators continue to scrutinize decentralized finance (DeFi) protocols, with several countries proposing new rules on staking services. The popularity of liquid staking has surged alongside Ethereum’s transition to proof-of-stake, increasing institutional interest in compliant DeFi solutions.
