This statement from the regulator aligns with other recent pro-crypto moves, including approvals for in-kind ETF redemptions and guidance that proof-of-stake mechanisms are not securities transactions. Liquid staking allows users to stake crypto while maintaining liquidity via receipt tokens, and has become a major force in DeFi with over $67 billion in total value locked. However, the SEC’s internal consensus is still very divided.
Commissioner Caroline Crenshaw criticized the statement for being speculative and potentially misleading. She also warned stakeholders to proceed with caution. On the other hand, crypto-friendly Commissioner Hester Peirce backed the clarification by comparing liquid staking to traditional custody practices. The rift of tensions in the SEC is becoming more clear as it adapts to the changing crypto space.
Liquid Staking Gets Regulatory Green Light
The US Securities and Exchange Commission (SEC) took a huge step toward providing clarity on digital asset regulation by stating that certain liquid staking activities in the crypto space do not constitute securities offerings. In a statement that was released on Tuesday, the SEC clarified that, depending on the facts and circumstances, liquid staking does not fall under the offer and sale of securities as defined by the Securities Act of 1933 and the Securities Exchange Act of 1934.
Liquid staking is where users stake their digital assets through a protocol and receive a “liquid staking receipt token” as proof of ownership.
Statement from the SEC
This clarification is part of the agency’s shift in regulatory posture under SEC Chair Paul Atkins, who described the move as a major advancement in defining which crypto asset activities are beyond the SEC’s jurisdiction. The announcement was made at a time of growing institutional interest in liquid staking strategies, particularly those tied to Solana (SOL). In fact, asset managers like Jito Labs, VanEck, and Bitwise are actively pushing for approval of related ETFs.
Liquid staking has become a dominant force in decentralized finance, with the total value locked (TVL) in these protocols approaching $67 billion, according to data from DefiLlama. Ethereum alone accounts for approximately $51 billion of that figure.
The SEC’s statement also follows several other recent pro-crypto actions taken under Atkins’s leadership. The agency recently launched Project Crypto, which is a regulatory reform initiative that was developed in response to recommendations from the White House’s Working Group on Digital Assets. Atkins has moved away from the previous administration’s enforcement-heavy approach, opting instead for more structured and transparent rulemaking.
Statement from the SEC
In May, the SEC clarified that proof-of-stake (PoS) mechanisms do not qualify as securities transactions. This was another move welcomed by the crypto community. In July, the agency also approved in-kind creations and redemptions for Bitcoin and Ethereum ETFs, which was a critical step that makes it possible for fund participants to exchange ETF shares directly for the underlying digital assets, rather than converting them to cash.
These regulatory developments are unfolding alongside other policy shifts in the United States. The recent passage of the GENIUS Act, along with the House’s approval of market structure reforms and anti-central bank digital currency (CBDC) measures, could mean that a new era of legislative support for digital assets is emerging.
Crenshaw Slams SEC Liquid Staking Statement
Meanwhile, SEC Commissioner Caroline Crenshaw publicly criticized the recent staff statement that was issued by the agency’s Division of Corporation Finance regarding liquid staking. She argued that the guidance adds confusion rather than clarity.
Some things are better left unsaid,” Crenshaw began in her response to the SEC’s statement. She also accused it of relying on speculative and unverified assumptions. She argued that the guidance builds a “wobbly wall of facts without an anchor in industry reality” and warned entities engaged in liquid staking to stay cautious. Her comments ended with the phrase “Caveat liquid staker.”
Statement from Caroline Crenshaw (Source: SEC)
Her response shed some light on the growing rift in the SEC on how to approach crypto regulation. While Crenshaw is very concerned that the statement may embolden risky interpretations of securities laws, other commissioners are much more supportive. Hester Peirce, which is considered as crypto-friendly, released her own commentary in support of the staff’s view. Peirce compared liquid staking to depositing goods with an agent who issues a receipt, and suggested the activity is not fundamentally different from familiar financial arrangements.
Statement from Hester Peirce (Source: SEC)
The disagreement is taking place as the SEC faces increasing pressure to provide regulatory clarity in the still changing digital asset space. The liquid staking sector, which allows users to stake their crypto assets while retaining liquidity through receipt tokens, has grown a lot in recent years.
Overall, this internal debate suggests that while the agency may be shifting toward a more nuanced stance on crypto, not all commissioners agree on the best path forward.
