The U.S. Securities and Exchange Commission (SEC) has issued a staff statement clarifying that certain liquid staking activities and related tokens are not considered securities under federal law. This guidance, released by the SEC's Division of Corporation Finance, applies to both protocol-based and custodial liquid staking providers and exempts staking receipt tokens, such as stETH, from securities classification when the underlying assets are not securities. The SEC emphasized that these activities do not involve an offer or sale of securities, as they lack entrepreneurial or managerial efforts typically associated with securities transactions. This regulatory clarity follows industry requests from major players including Jito Labs, Bitwise Investments, Multicoin Capital, VanEck, and the Solana Institute. The SEC's decision is seen as a milestone in its 'Project Crypto' initiative, paving the way for broader institutional participation in decentralized finance (DeFi) and enabling the potential inclusion of staking mechanisms in spot Ethereum exchange-traded funds (ETFs). Leading liquid staking protocols such as Lido and Jito have welcomed the guidance, which removes a major regulatory hurdle and supports the development of institutional-grade crypto products. SEC Commissioner Hester Peirce highlighted that liquid staking represents an innovative solution to traditional financial infrastructure challenges. The SEC's stance signals a more crypto-friendly regulatory environment, fostering trust and liquidity in the market.