Liquid Staking Tokens Deemed Non-Securities, Easing ETH ETF
On August 5, the SEC’s Division of Corporation Finance issued staff guidance clarifying that liquid staking tokens do not constitute securities under federal law. Tokens such as stETH and JITOSOL, issued by platforms like Lido and Rocket Pool, are exempt from SEC registration so long as the underlying assets are not tied to an investment contract. SEC Chair Paul Atkins and Commissioner Hester Peirce hailed the move, likening liquid staking tokens to traditional deposit receipts. Industry leaders at Paradigm and a16z welcomed the decision as a significant win.
As part of the SEC’s broader “Project Crypto” initiative, this clarification is viewed as the final hurdle for spot ETH ETF approvals. By defining liquid staking tokens as non-securities, fund issuers can more efficiently manage daily inflows and outflows, boosting market liquidity and demand for ETH. Traders may see higher volumes in staking derivatives as the industry prepares for faster ETH ETF pathways.
Bullish
The SEC’s clear ruling that liquid staking tokens are not securities removes regulatory uncertainty and paves the way for spot ETH ETF approvals. In the short term, traders can expect positive sentiment around ETH, driving increased trading volumes in staking derivatives. Over the long term, ETF inflows could bolster ETH demand and price stability, making this a bullish catalyst for the Ethereum market.