SEC Clarifies Liquid Staking Tokens Are Non-Securities
The SEC issued guidance clarifying that, under specific conditions, liquid staking tokens (LSTs) and their receipt tokens do not constitute securities. This regulatory clarity removes registration barriers and enables institutions to integrate liquid staking tokens into financial products. Industry leaders, including Alluvial’s CEO Mara Schmiedt and Jito Labs’ CEO Lucas Bruder, praised the decision for opening new revenue streams, secondary markets and enhancing DeFi liquidity. The guidance relies on the Howey test to deem purely administrative LST activities as non-securities. Commissioner Caroline Crenshaw dissented, warning of remaining regulatory uncertainty. The move is expected to boost institutional adoption and expand retail access to staking rewards without lock-ups.
Bullish
The SEC’s clarification reduces legal risk around liquid staking tokens and removes registration hurdles. In the short term, traders may see increased demand for LSTs as protocols launch new products. Over the long term, clearer regulations will encourage institutional inflows and the development of secondary markets, boosting liquidity. Despite dissent over lingering uncertainties, the guidance is a bullish catalyst for tokens supporting liquid staking.