The U.S. Securities and Exchange Commission’s Division of Corporation Finance issued a staff statement on 5 August clarifying that certain liquid staking arrangements and the receipt tokens they generate do not constitute securities transactions under federal law. The guidance concludes that when users exchange crypto assets for tokens representing staked coins and accrued rewards, no “investment contract” is created provided there is no expectation of entrepreneurial or managerial efforts by a third party. The clarification applies to both protocol-level and custodial liquid staking services and exempts secondary-market trading of the associated receipt tokens from registration requirements, so long as the underlying assets are not themselves securities. The move marks the most concrete outcome to date of the SEC’s “Project Crypto” initiative, which aims to provide case-by-case regulatory clarity for digital-asset markets. Industry participants said the decision removes a key regulatory overhang for leading Ethereum and Solana staking protocols such as Lido and Jito and could allow pending spot Ether exchange-traded funds to include staking features to manage liquidity. Market watchers framed the statement as a milestone for decentralised finance by legitimising a practice that accounts for a significant share of staked crypto assets. Not all regulators are satisfied. SEC Commissioner Caroline Crenshaw criticised the staff position for relying on assumptions that may not hold across all staking models and warned that liquid staking could pose systemic risks reminiscent of pre-crisis rehypothecation in traditional finance. Former SEC officials echoed concerns that the narrow scope of the guidance could leave many market participants uncertain about compliance.