The U.S. Securities and Exchange Commission (SEC) has provided new guidance regarding liquid staking activities, clarifying that under certain circumstances, these activities do not constitute securities offerings. The SEC's Division of Corporation Finance issued a statement that aims to clarify the application of federal securities laws to crypto assets, specifically addressing a type of protocol staking known as "liquid staking".

Liquid staking involves staking crypto assets through a software protocol or service provider, and receiving a "liquid staking receipt token" in return. This token represents the staker's ownership of the staked crypto assets and any rewards earned. The SEC's statement clarifies that, depending on the specific facts and circumstances, the covered liquid staking activities do not involve the offer and sale of securities under Section 2(a)(1) of the Securities Act of 1933 or Section 3(a)(10) of the Securities Exchange Act of 1934.

According to the Division, liquid staking activities and the associated receipt tokens do not require SEC registration as long as the deposited assets themselves are not securities or part of an investment contract.

In liquid staking, crypto holders deposit their assets with a third-party or protocol-based provider and receive "staking receipt tokens" in return. These tokens serve as proof of ownership for the deposited crypto and any rewards earned through staking. Unlike traditional staking, liquid staking allows users to retain liquidity, as the receipt tokens can be used in other crypto applications or redeemed later, subject to protocol conditions such as "unbonding" periods. These arrangements can be facilitated either programmatically through self-executing code (protocol-based) or via custodians who manage wallets and interact with staking protocols on behalf of users. In either case, users maintain ownership of their deposited assets throughout the staking process.

The SEC's Chairman, Paul S. Atkins, stated that the guidance is a "significant step forward" in clarifying the SEC's view on crypto asset activities that fall outside its jurisdiction. He also expressed his pleasure that the SEC's Project Crypto initiative is producing results.

Industry observers believe that this clarification could encourage more institutional participation in staking activities, which may foster innovation in tokenized finance. The SEC's willingness to adopt a more flexible stance aligns with broader discussions about how to regulate digital assets without stifling technological progress.

This move is seen as a significant step in the SEC's ongoing efforts to define its jurisdiction over digital assets, especially as the market evolves with new financial instruments. While the statement is not a comprehensive framework for digital asset regulation, it represents a meaningful development in the SEC's approach.