The U.S. Securities and Exchange Commission’s Division of Corporation Finance issued a staff statement on August 5, 2025, addressing certain liquid staking activities, marking a key follow-up to its May 29, 2025 Protocol Staking Statement. Read the full statement here.
The following opinion editorial was written by Alex Forehand and Michael Handelsman for Kelman.Law.
What the Statement Covers
The statement expands on Protocol Staking by clarifying the treatment of liquid staking, where depositors receive a one-for-one Staking Receipt Token (SRT) in exchange for staking Covered Crypto Assets with a third-party service provider or protocol-based arrangement.
The staff takes the position that, if strict factual conditions are met, liquid staking activities—as defined—do not constitute the offer or sale of securities under Section 2(a)(1) of the Securities Act or Section 3(a)(10) of the Exchange Act.
Key assumptions include that providers perform only administrative or ministerial roles, do not make discretionary staking decisions such as whether, when, or how much to stake, and do not guarantee yield—thus avoiding the key prongs of “efforts of others” and “expectation of profits” under Howey.
How This Relates to the May Statement
This August statement explicitly builds on the earlier Protocol Staking Statement we previously discussed, which addressed solo staking, custodial staking, and delegated staking. To read our discussion of the SEC’s Statement on Protocol Staking, see here.
The new guidance confirms that specific liquid staking models, when designed to mirror those same fact patterns, also fall within the same narrow carve-out—but only if they conform precisely to the staff’s assumptions.
What Is and Is Not Covered
Covered:
- SRTs issued to depositors as receipts (not investment contracts) for staked tokens;
- Custodial or protocol-based liquid staking where the provider simply holds tokens, stakes them, issues/ redeems SRTs, and collects fees—without exercising discretion or providing guarantees.
Not Covered:
- Arrangements where providers exercise discretion over when, whether, or how much to stake;
- Models where SRTs are used to generate further yield consistent with provider discretion;
- Features deviating from the defined assumptions (e.g. reward guarantees, centralized selection of node operators).
If those assumptions are not strictly met, the SEC staff’s safe‑harbor view no longer applies.
How the SEC Applies Howey in the Liquid Staking Context
The staff treats SRTs as receipts—similar to warehouse receipts—evidencing ownership of the staked asset, not securities, because the underlying Covered Crypto Asset is not a security.
The test centers on whether there are entrepreneurial or managerial efforts of others generating yield. Per the statement, Liquid Staking Providers act as agents, not investment managers—they hold assets, stake per protocol, issue/redeem receipt tokens, and take fees—but do not direct staking decisions or guarantee returns, thus failing to meet the “efforts of others” threshold.
Practical Implications & Caveats
Like the earlier Protocol Staking Statement, the liquid staking guidance is non‑binding, reflects the views of Corp Fin staff only, and is highly fact‑specific—with detailed assumptions that must be met exactly.
As Commissioner Crenshaw warned, deviation from any of these assumptions takes the activity “outside the scope of this statement.”
Neither statement—May 29 and August 5—provides safe harbor for stablecoin “staking,” rehypothecation, or governance‑based DAO staking models; those continue to require separate legal analysis.
Summary
The SEC’s May 29, 2025, statement laid out the SEC staff’s narrow view that certain protocol staking models, void of managerial discretion, are not securities. Its August 5, 2025, statement extends that view to a defined class of liquid staking arrangements, but only when providers perform purely administrative roles and SRTs serve as receipts, not investment vehicles.
Neither statement covers stablecoin yield, restaking, or DAO staking tied to governance or delegated decision‑making. Legal risk remains if providers introduce discretion, guarantees, or additional services beyond the narrow administrative framework.
Our firm regularly advises on token structure, staking protocol design, DAO governance models, and crypto service offerings. We help clients align with evolving SEC staff views—conducting Howey-based risk assessments, drafting terms that meet regulatory thresholds, and preparing for potential SEC review.
Contact us here to discuss your staking model, token issuance, or governance structure in light of these latest SEC statements.
This article originally appeared at Kelman.law.
