Thomas Daniels
The recent guidance issued by the U.S. Securities and Exchange Commission (SEC) regarding liquid staking has sparked cautious optimism among institutional investors, while simultaneously exposing unresolved regulatory and legal uncertainties.
On August 5, 2025, the SEC’s Division of Corporation Finance issued a statement clarifying that certain liquid staking practices—specifically those in which service providers act purely in administrative or ministerial roles and issue one-to-one backed receipt tokens—do not constitute securities offerings under the Securities Act of 1933 or the Exchange Act of 1934.
However, this statement is explicitly nonbinding and represents only the views of the staff within the division, not the official position of the Commission itself. As such, it remains subject to interpretation and potential legal challenge.
SEC Commissioner Caroline Crenshaw publicly criticized the guidance, describing it as “murky rather than clarifying” and warning that even minor deviations from the narrowly defined criteria could trigger different regulatory treatment.
Further skepticism was voiced by former SEC chief of staff Amanda Fischer, who drew parallels between liquid staking and the rehypothecation practices that contributed to systemic instability during the 2008 financial crisis.
Beyond securities law, critical questions surrounding taxation remain open. One of the most pressing issues is whether staking rewards are to be taxed upon receipt or upon disposition. This uncertainty complicates compliance for both retail and institutional participants, including ETF issuers.
Moreover, the status of grantor trust tax rules continues to impede the integration of staking strategies into exchange-traded funds. Until these questions are resolved, the expansion of staking-based financial products into mainstream investment vehicles will likely remain limited.
Despite these complexities, the staff’s guidance signals a measured step forward for the adoption of liquid staking by institutional investors. Yet, it also underscores the urgent need for comprehensive regulatory clarity across securities classification, tax policy, and fund structuring.
