08-11-2025 
|
Getting your Trinity Audio player ready...
|
Just days after launching “Project Crypto,” the United States Securities and Exchange Commission (SEC) followed up with another positive development for the cryptocurrency industry, a statement saying that liquid staking activities and liquid staking tokens do not constitute the sale of securities.
Gary Gensler’s SEC’s war on staking
Staking products and services are relatively new in the cryptocurrency world, with the first instances of these products coming online in 2019 and becoming popular during the decentralized finance (DeFi) Summer era of crypto (2020).
However, that popularity was short-lived in the United States due to the scrutiny they faced from the SEC under the Gensler Administration.
During Gensler’s time as the chairman of the SEC, the SEC charged Kraken with offering an unregistered staking program in the U.S., alleging it functioned like a securities offering without disclosures. The SEC launched enforcement against Coinbase (NASDAQ: COIN), accusing it of operating an unregistered staking service that functioned like a securities broker offering unregistered securities. The SEC filed charges against Consensys, alleging that MetaMask offered liquid staking exposure (via Lido and Rocket Pool) as unregistered securities and acted as an unregistered broker-dealer.
Unsurprisingly, when the prosecution of these big companies began, many companies backed away from staking products in the U.S., but thanks to the SEC’s new statement, this could soon be changing.
What is liquid staking crypto?
There are different types of staking, but this SEC statement zeroes in on liquid staking specifically.
Instead of locking up your crypto and losing access to it like with traditional staking (also called “locked staking”), liquid staking lets you stay liquid while still earning yield. You deposit your crypto with a liquid staking provider, and they will give you a receipt token, a tradable, yield-bearing representation of your deposit.
For example, if you deposit ETH with a liquid staking provider, you often receive Staked ETH (stETH) in return. That stETH is not real ETH, but it represents the ETH that you have staked and accrues value over time. As your deposited ETH earns yield, your stETH might mirror that in one of two ways: either your stETH increases in value (so 1 stETH equals more than 1 ETH), or you’re issued more stETH to reflect the growing balance of your stake.
Unlike locked staking, you can sell, trade, or use stETH on other DeFi apps whenever you want. The overall goal of these liquid staking products and activities is to allow users to earn yield while remaining liquid, as opposed to locked staking, where users still earn yield but do not have access to the crypto they have locked away, sometimes for a specified period of time that can span hundreds of days.Why it matters for the cryptocurrency industry
With this statement, the SEC is walking back years of enforcement. Companies like Coinbase and Consensys now have a clear, legal runway to relaunch liquid staking products in the U.S., and this new guidance opens the door for new players to enter the space.
Clear guidelines pave the way for institutional capital to enter cryptocurrency markets. Accredited and institutional investors have effectively been sidelined when it comes to cryptocurrency products and services due to the lack of regulatory clarity. But thanks to the new guidance, including this statement on liquid staking from the SEC, these supposedly big players with big money can finally get in the game.
The road to institutional crypto
This isn’t just a one-off policy shift. It’s part of a broader trend in the blockchain and cryptocurrency industry.
Since Trump took office, we’ve seen a number of new crypto legislations aimed at bringing crypto onshore and institutionalizing it. Everything from token classifications to stablecoin guidance points toward the bigger goal that this current administration has for the blockchain and cryptocurrency industry: to turn it into a proper, regulated financial sector.
The federal government in the U.S. is slowly pushing the industry toward a world where crypto-financial products mirror the traditional finance (TradFi) world, with services like lending, borrowing, and yield generation running on blockchain infrastructure; moving the industry out of a space where it only appeals to blockchain enthusiasts and speculative retail users, and into a space where these products are appealing to pension funds, banks, and asset managers.
It’s important to mention that these changes highlight who the real winners are in this current crypto cycle that we are in: the crypto corporates. Nearly all of the legislative changes made within the past year, or that are on the table for approval, ultimately give crypto corporates an easier time running their businesses and pave the way for them to offer new products that will primarily appeal to accredited and institutional investors–not the retail investors and blockchain enthusiasts who made crypto into what it is today.
That isn’t necessarily a bad thing, and honestly, these new, more established players with deeper pockets are the new entrants you would expect to see as the industry matures. But it also serves as a reminder that crypto isn’t really about decentralization anymore. It’s about getting the pieces in place to make crypto a somewhat critical, or at the very least, unignorable, part of the U.S. financial system, or as Trump says, making America the crypto capital of the world.
Watch: Breaking down solutions to blockchain regulation hurdles
Recommended for you
