Aug. 5, 2025: Today, the Division of Corporation Finance released a sequel to its statement on protocol staking.[1] This latest statement clarifies its views on the “security” status of “liquid staking” under the federal securities laws.
Liquid staking is a new solution to an old problem. People who own fungible goods—whether gold bars or cereal grains—sometimes transfer possession or control of those goods to a third party for storage, transport, or some other purpose. Documents of title, like warehouse receipts and bills of lading, enable market participants to transfer legal and beneficial ownership and thus simplify transaction settlement and unlock greater liquidity for those goods.
Commercial market participants in the onchain economy also have discovered the benefits of receipt instruments. Participants in proof-of-stake networks stake their crypto assets to a smart contract, a delegate, or some other system to support the security and censorship resistance of these networks. In doing so, they lose the ability to transfer the crypto assets until such assets are unstaked, a process that can take days or even weeks. A person who stakes her crypto assets through a liquid staking protocol or provider, however, receives liquid staking tokens (“LSTs”) that demonstrate legal and beneficial ownership of the staked crypto assets. The LSTs enable her to transfer her staked crypto assets to another blockchain network address immediately without unstaking her crypto assets, which reduces unnecessary transaction costs. She can use the LSTs as collateral or to participate in crypto applications, which can generate a return.
Today’s statement clarifies the Division’s view that liquid staking activities in connection with protocol staking do not involve the offer and sale of securities. Instead, it is a variant on the longstanding practice of depositing goods with an agent who performs a ministerial function in exchange for a receipt that evidences ownership of the goods.
People with additional questions may reach out to the Division for further guidance. Several ways to contact the Division are available at https://www.sec.gov/about/divisions-offices/division-corporation-finance/division-corporation-finance-contact-us. The Crypto Task Force also welcomes inquiries and feedback on this statement through crypto@sec.gov.
I would like to thank Cicely LaMothe, Acting Director of the Division of Corporation Finance, and her staff for their diligent work to provide clear statements about staff views regarding the applicability of securities regulations to crypto assets.
[1] Division of Corporation Finance, “Statement on Certain Protocol Staking Activities,” May 29, 2025, available at https://www.sec.gov/newsroom/speeches-statements/statement-certain-protocol-staking-activities-052925.Source: MyPR International
Securities and Exchange Commission Division of Corporation Finance Issues Staff Statement on Certain Liquid Staking Activities