The US Securities and Exchange Commission’s (SEC) Division of Corporation Finance issued new staff guidance stating that liquid staking does not automatically constitute a securities offering.
According to an Aug. 5 statement, neither the liquid staking activities nor the associated staking receipt tokens (SRTs) constitute offers or sales of securities that require registration.
The statement defines liquid staking as depositing “covered crypto assets” with a protocol or service provider and receiving newly minted SRTs one-for-one with the deposited assets.
SRTs function as receipts that evidence the holder’s ownership of the staked assets and any rewards, while preserving liquidity for use as collateral or in other applications without unstaking.
Rewards and slashing adjust SRT economics either by changing the SRT-to-asset ratio or by issuing/burning SRTs, with redemption subject to protocol unbonding rules.
The model is how most liquid staking providers in DeFi currently work.
Additional clarity
On the legal analysis, the Division applies Howey and finds the provider’s role administrative or ministerial, not the kind of entrepreneurial or managerial efforts that create an investment contract.
Providers facilitate staking but do not decide whether, when, or how much a depositor stakes, nor do they set or guarantee rewards.
As a result, the covered liquid staking activities do not involve securities transactions, and SRTs themselves are not securities, being so much as receipts for non-security assets.
Secondary-market offers of SRTs likewise do not require registration under the described conditions.
Yet, the SEC issued a follow-up statement clarifying that the view does not extend to providers that go beyond administrative functions or to structures that deviate from the statement.
Consequently, although most of the SRT currently offered in the market are not considered securities, the agency’s statement is not a blanket approval for liquid staking in the US.
Elaborating on staking
The update builds on a May 29 staff statement that addressed other forms of protocol staking, such as self/solo, delegated, custodial, and non-custodial. Likewise, the regulator concluded that participants do not need to register those activities.
The earlier guidance also noted that features such as early withdrawals, bundled rewards, slashing protection, or asset aggregation do not convert staking into a securities offering by themselves.
Together, the two statements sketch more precise boundaries for staking under federal securities laws while leaving room for fact-specific assessment.
