SEC Signals Leniency on Some Liquid Staking
SEC's Evolving Stance on Liquid Staking
The U.S. Securities and Exchange Commission (SEC) has offered some clarity regarding cryptocurrency liquid staking, suggesting that certain activities may not constitute securities offerings. This marks a potentially significant shift in the agency's approach to digital asset regulation.
In a recent Staff Statement, the SEC stated that, depending on the specific facts and circumstances, the covered liquid staking activities do not necessarily involve the offer and sale of securities, referencing the Securities Act of 1933 and the Securities Exchange Act of 1934.
The SEC defines liquid staking as staking digital assets via a protocol and receiving a "liquid staking receipt token" representing ownership.
SEC Chair Paul Atkins stated that this statement "is a significant step forward in clarifying the staff’s view about crypto asset activities that do not fall within the SEC’s jurisdiction."
Implications for Liquid Staking ETFs
This clarification arrives amidst growing interest in liquid staking exchange-traded funds (ETFs). Companies such as Jito Labs, VanEck, and Bitwise have been advocating for the approval of liquid staking strategies related to Solana (SOL) funds.
Liquid staking has rapidly grown into a substantial subsector within the crypto space. The total value locked (TVL) across all protocols is nearing $67 billion, according to DefiLlama, with Ethereum accounting for $51 billion of that total.
SEC's Pro-Crypto Tilt Under Atkins
This announcement follows the SEC’s launch of Project Crypto, an initiative aimed at overhauling the regulatory framework for cryptocurrency trading in the U.S. Chair Atkins has indicated this project responds to recommendations from the White House’s Working Group on Digital Assets.
Atkins has seemingly adopted a more flexible approach to digital assets, moving away from the previous “regulation by enforcement” strategy. This also included a clarification in May stating that proof-of-stake protocols do not inherently constitute securities transactions.
Under Atkins' leadership, the SEC has also eased regulatory burdens on cryptocurrency ETFs, approving in-kind creations and redemptions for Bitcoin (BTC) and Ether (ETH) ETFs in July, allowing authorized participants to exchange ETF shares directly for the underlying assets.
Broader Policy Shifts
The U.S. crypto industry is also benefiting from broader policy reforms. This includes the passage of the GENIUS Act, and House approval of market structure and anti-CBDC legislation ahead of the August recess.
As regulatory frameworks evolve, Codeum remains committed to providing blockchain security solutions, including smart contract audits and KYC services, for projects navigating this changing landscape.