SEC Declares Liquid Staking Exempt from Securities Laws Under Project Crypto

* SEC exempts liquid staking from securities laws * Path cleared for staking in spot Ethereum ETFs On August 5, 2025, The Block reported that the U.S. Securities and Exchange Commission (SEC) issued new guidance declaring that certain liquid staking activities do not fall under securities regulations. This move, part of the SEC's "Project Crypto" initiative, marks a significant regulatory shift intended to foster a clearer framework for digital asset activities in the United States. According to the SEC, individuals can stake cryptocurrency assets through a software protocol or service provider and receive "liquid staking receipt tokens" as proof of ownership. These tokens do not need registration as securities, provided the underlying crypto assets are not part of an investment contract. The SEC's Division of Corporation Finance stated that the offer and sale of these receipt tokens is not equivalent to an offer and sale of securities. Therefore, this ruling defines the SEC's jurisdiction more precisely and reduces ambiguity around staking activities. Nate Geraci, President of NovaDius Wealth, stated that this guidance addresses a key barrier that has prevented spot Ethereum exchange-traded funds (ETFs) from incorporating staking mechanisms, remarking that this development could act as the "last hurdle" for such a move. Liquid staking tokens will be particularly important for managing ETF liquidity, addressing a major concern the SEC previously cited. This new regulatory clarity should open the door for increased institutional investment in Ethereum-based products. The ruling follows earlier remarks the SEC made in May 2025, which indicated that proof-of-stake activities do not inherently qualify as securities transactions. The "Project Crypto" initiative, spearheaded by SEC Chair Atkins, works to modernize the regulatory landscape for crypto distributions, custody, and trading and is part of a broader U.S. government effort to position the country as a leader in the digital asset industry. According to CoinMarketCap on August 5, Ethereum (ETH) traded at $3,589.43 as of 19:08 UTC, reflecting a 2.4% decrease in its 24-hour trading volume.