The U.S. Securities and Exchange Commission (SEC) has presented a new roadmap on a long-awaited issue in the cryptocurrency world. The agency has provided significant relief to the industry by clarifying that some liquid staking activities do not fall under securities laws. This development is considered a critical step toward the approval of staking functionality in spot Ethereum ETFs.
Historic Statement from the SEC
New guidance published by the SEC's Division of Corporate Finance states that "liquid staking receipt tokens" issued under certain circumstances may not be considered securities. Staking services offered by decentralized protocols such as Lido, Marinade Finance, JitoSOL, and Stakewise are particularly considered within this scope.
SEC Chairman Paul Atkins stated, "Today's announcement is a major step toward clarifying the aspects of crypto asset activities that fall outside the SEC's jurisdiction," emphasizing that the agency's newly launched "Project Crypto" initiative is already yielding tangible results.
Is the door to staking opening in Ethereum ETFs?
According to Nate Geraci, President of NovaDius Wealth, this announcement may have cleared one of the SEC's final obstacles to allowing staking in spot Ethereum ETFs. "Liquid staking tokens could facilitate liquidity management in ETFs," Geraci said in a post on the social media platform X.
Large investment firms like BlackRock are also known to be considering revising their Ethereum ETF applications to include staking. This new SEC clarification could pave the way for such strategies.
Discussions continue: Are there parallels to the 2008 crisis?
However, not everyone is happy with this announcement. Former SEC chief Amanda Fischer heavily criticized liquid staking, comparing it to the rehypothecation practices that led to the collapse of Lehman Brothers in 2008. Fischer stated, “This practice allows clients to make risky transactions using their assets. The SEC’s decision to leave this unregulated demonstrates that the lessons of the 2008 crisis have not been learned.”
However, these comments drew significant backlash from the crypto community. Matthew Sigel, VanEck’s head of digital asset research, countered Fischer, saying, “You’re saying the SEC approves crypto and yet you’re saying it’s unregulated. These two statements contradict each other.” Helius Labs CEO Mert Mumtaz argued that Fischer either doesn’t understand the system or is deliberately distorting it.
TVL Increases in DeFi Sector
The SEC’s announcement bolstered confidence in liquid staking, leading to a rise in total assets locked in the sector. According to DefiLlama data, the total amount of assets locked in liquid staking protocols has increased by 15% since the beginning of the year.
Lido Finance dominates the sector with $31.88 billion in TVL. Binance’s ETH staking service grew by nearly 90%, from $6.05 billion at the beginning of the year to $11.4 billion.
