SEC Rules Liquid Staking Tokens Are Not Securities

SEC clarified that liquid staking receipt tokens are not securities under federal law if providers act solely as agents performing administrative tasks such as minting and redemption. Under the Howey test, these tokens’ value depends on the performance of the underlying assets, mainly ETH, and protocol-driven yields. The exemption does not apply to providers with discretionary control—like setting reward rates, selecting validators, or altering product structures—or those offering investment contract features; such arrangements remain securities. Secondary trading may also qualify for exemption under the same criteria. With $67 billion locked in liquid staking on Ethereum, this regulatory clarity removes SEC registration requirements for compliant liquid staking services. It supports DeFi innovation, boosts crypto liquidity, and paves the way for spot ETH ETFs and institutional adoption. Market participants should maintain strict compliance to benefit from this relief and avoid securities classification.