The U.S. Securities and Exchange Commission's (SEC) Division of Corporation Finance has issued a pivotal statement clarifying that certain liquid staking activities, particularly those where rewards stem directly from protocol staking and services are ministerial, do not constitute securities offerings. This long-awaited guidance, released on August 5, 2025, marks a significant regulatory milestone for the burgeoning liquid staking sector, potentially paving the way for broader institutional engagement.
Mara Schmiedt, in a social media post, hailed the announcement as a "holy sh*t moment," directly affirming the foundational principles of platforms like Liquid Collective. Schmiedt stated: > "The SEC just released a statement that directly affirms what we've been building since day one: liquid staking structures like Liquid Collective (@liquid_col), where rewards flow from protocol staking and services are ministerial, are not securities." This clarity is expected to remove a substantial regulatory overhang that has concerned market participants.
Liquid Collective, a prominent liquid staking standard, has actively engaged in advocating for this regulatory clarity over the past three years. The platform, developed with a focus on regulatory alignment and institutional readiness, has collaborated with key industry bodies and legal experts. Schmiedt acknowledged the efforts of partners such as TeamPOSA, the Crypto Council for Innovation (@crypto_council), and Willkie Farr & Gallagher LLP (@WillkieFarr), along with individuals like @evweiss1 and @evanmthomas, in pushing for this definitive stance.
The SEC's decision hinges on the analysis that such liquid staking activities, under specified conditions, do not meet the "investment contract" test, particularly regarding the absence of entrepreneurial or managerial efforts by the liquid staking provider that would classify them as securities. This distinction is crucial for Liquid Staking Tokens (LSTs), which represent staked assets while maintaining liquidity. The guidance specifies that providers must not select when or how much of a depositor's assets to stake, nor guarantee rewards, for the activities to fall outside securities classification.
Industry analysts anticipate that this regulatory clarity will act as a catalyst for increased mainstream adoption of LSTs. The ability to stake crypto assets while retaining liquidity for use in other decentralized finance (DeFi) applications or as collateral is a key innovation. This development is seen as a positive step by the SEC under Chairman Paul Atkins, who has emphasized providing clearer guidance for emerging financial technologies. The move is expected to foster innovation and growth within the DeFi space by providing a more defined and structured regulatory environment.