Freshly released guidance from staff at the US Securities and Exchange Commission (SEC) indicates that tokens received in exchange for staking ether are not classified as securities, provided they function strictly as receipts.
The Division of Corporation Finance issued this advisory on Friday. This development comes three years after the same regulatory body penalized a cryptocurrency exchange $30 million over its staking offerings.
What SEC Staff Said About Staked ETH
Staking involves locking up coins to support blockchain operations in exchange for earning rewards. Through liquid staking services, users receive a tradable token serving as proof of the deposited coins.
Securities are subject to strict registration and disclosure regulations. Established by a 1946 Supreme Court standard, the Howey test evaluates whether buyers have an expectation of profit derived from the managerial efforts of others.
As outlined in the FAQs, a staking receipt token functions as a “digital tool” whenever the underlying coin is categorized as a digital commodity. In an interpretation released on March 17, both the SEC and the Commodity Futures Trading Commission (CFTC) identified 16 digital commodities, which included ether (ETH), then trading near $2,685.
How Staking Went From SEC Target to Staff Approval
In February 2023, Kraken agreed to a $30 million penalty and halted its US staking operations to settle charges brought by the SEC. The agency pointed out that Kraken had marketed annual returns reaching up to 21%.
“Whether it’s through staking-as-a-service, lending, or other means, crypto intermediaries, when offering investment contracts in exchange for investors’ tokens, need to provide the proper disclosures and safeguards required by our securities laws,” Gary Gensler, then the SEC chair, issued a warning.
Four months afterward, the SEC initiated a lawsuit against Coinbase, designating its staking program as an unregistered securities offering. The agency subsequently dropped that legal action in February 2025.
Statements published by SEC staff in May and August 2025 later clarified that protocol staking and liquid staking do not constitute offerings of securities.
The One Condition Is That the Token Stays a Receipt
The primary caveat lies in how staff define a receipt. The token must not alter the underlying rights of the staked ETH nor generate additional rewards.
Furthermore, providers are prohibited from lending, pledging, or otherwise reusing the deposited coins. Additionally, the token cannot establish or determine the reward amounts—a key distinction from Kraken, which actively advertised specific return rates.
Not all members of the SEC shared this perspective. Commissioner Caroline Crenshaw expressed concern that the August 2025 liquid staking statement relied on assumptions that might fail to reflect the reality of actual programs, publishing her response under the title “Caveat Liquid Staker.”
The updated FAQs additionally addressed token buybacks, wherein a project utilizes its own funds to purchase its tokens from the open market. On an operational network, announcing a buyback is not interpreted as a promise that could transform the token into a security. Conversely, on an incomplete network, promoting a buyback as a mechanism to secure returns may still trigger security classification.
The guidance documents explicitly state that they hold no binding legal force. This distinction carries increased weight following the failure of the Clarity Act—a proposed bill intended to divide cryptocurrency oversight between the SEC and the CFTC—which stalled in the Senate this month.
In March, BeInCrypto noted analyst reports suggesting that regulators had already fulfilled the majority of the legislative goals outlined in the bill. At the same time, the analysis highlighted a vulnerability: unlike enacted legislation, regulatory guidance can be rescinded at any time by a subsequent administration.
Frequently Asked Questions
- Are staking receipt tokens considered securities under the new guidance? No, SEC staff guidance states that tokens received for staking ether are not securities, provided they operate strictly as receipts without altering the underlying rights or adding extra rewards.
- What condition must be met for a staking token to be classified purely as a receipt? The token must not modify the rights linked to the staked ETH, add extra rewards, and the provider cannot lend, pledge, or reuse the deposited coins or set reward amounts.
- Did all SEC officials agree with this new stance on liquid staking? No, Commissioner Caroline Crenshaw voiced disagreement, arguing that the August 2025 liquid staking statement depended on assumptions that may not align with real-world programs.
- Do these SEC staff FAQs carry binding legal force? No, the FAQs explicitly state they hold no legal force and can be withdrawn by a future administration.
