Latest news with #liquidstaking
Yahoo
4 days ago
- Business
- Yahoo
Liquid Staking Crypto Isn't a Securities Issue, SEC Says
Life is good for the crypto industry under the new SEC leadership. The agency last week gave a green light to so-called liquid staking, potentially paving the way for staking by some ETFs. In staff comments, the Securities and Exchange Commission made clear that under certain sets of conditions, the use of liquid staking does not make something a security, meaning that the vehicle would not fall under the agency's oversight. That's welcome news for spot-price crypto exchange- traded products that are registered under the Securities Act of 1933 rather than the Investment Company Act of 1940. The use of staking — whereby digital asset owners lend some of their crypto holdings to be used in a network's consensus mechanism —is a benefit to owning Ethereum, Solana and other currencies. Asset owners are rewarded for their lending by receiving additional currency. Numerous crypto ETPs are waiting for the SEC to approve the use of staking within their products, but to date, very few have been successful. SEC Chairman Paul Akins and Commissioner Hester Peirce praised the development, which the former called: 'a significant step forward in clarifying the staff's view about crypto asset activities that do not fall within the SEC's jurisdiction.' Atkins credited the comments to the SEC's recently announced Project Crypto, which he said 'is already producing results for the American people.' READ ALSO: Like Active Management? Odds of Outperformance Are Slim and ETFs for Risk-On Investors Assumptions All the Way Down The lone Democrat commissioner, Caroline Crenshaw, cautioned that the staff comments may apply in few, if any, cases, as the statement 'stacks factual assumption on top of factual assumption on top of factual assumption' and may not represent how liquid staking actually occurs. 'The legal conclusions in the statement are circumscribed by the staff's plentiful assumptions about liquid staking,' she said in a statement. 'For those entities whose liquid staking programs deviate in any respect from the soaring wall of factual assumptions erected in the liquid staking statement, the message should be clear: Caveat liquid staker.' Liquid staking solves a problem in crypto networks that use proof-of-stake validation: Staking has liquidity constraints, as un-staking assets in order to transfer them can take days or weeks. Liquid staking provides asset owners with tokens that can be used to transfer assets, making transactions faster and easier. What's at Stake: However, former SEC Chair Gary Gensler's chief of staff and senior counsel, Amanda Fischer, who is now policy director at Better Markets, raised red flags. Assets can be restaked numerous times, with the generation of new tokens resembling leverage on derivatives, harkening back to the subprime mortgage crisis, Fischer said in a post on X. 'It will exacerbate risks in the crypto market, especially when this 'liquid staked' crypto is put into ETF wrappers.' This post first appeared on The Daily Upside. To receive exclusive news and analysis of the rapidly evolving ETF landscape, built for advisors and capital allocators, subscribe to our free ETF Upside newsletter. Sign in to access your portfolio
Yahoo
06-08-2025
- Business
- Yahoo
Liquid Staking Tokens Aren't Securities, SEC Says. What That Means for Crypto Investors.
Key Takeaways The SEC said liquid staking and related tokens don't run afoul of securities laws, addressing the more than $67 billion in total value locked across blockchains. The crypto-friendly guidance was a win for decentralized finance platforms (DeFi). Guidance isn't law, and subject to chasing yield and liquidity in the crypto world just got handed a nice gift from US securities regulators. The Securities and Exchange Commission announced Tuesday that liquid staking and related tokens don't run afoul of securities laws, effectively flashing the green light to centralized and decentralized crypto trading platforms that offer those services and corresponding rewards, as well as to their customers. The liquid staking guidance is incremental clarity for the crypto industry, following up on its views on protocol staking in May, and addressing the more than $68 billion in value locked up across all blockchains, according to data compiled by research platform DefiLlama. Staking is a collective process in which people pledge their tokens to shore up a blockchain network's security and validate transactions. In return for doing this, they earn rewards denominated in the native token. This is sometimes compared to a savings account and the interest they accrue. On the surface that's true, though, staking generally yields rewards not through lending, but through fees generated from people using the blockchain network and a rise in token prices. Liquid staking allows people to pledge their tokens, but also retain the liquidity of those assets through what are called liquid staking tokens (LSTs), also referred to as liquid staking derivatives (LSDs). For example, Lido and Rocket Pool, two leading Ethereum liquid staking providers, use stETH and rETH, respectively. Their customers stake their ETH (ETHUSD), and use LSTs to collect rewards, sometimes presented as an annual percentage yield (APY),and/or use them on various DeFi platforms to say, buy other crypto. Call it double-dipping, but not necessarily securities, per the SEC. In May, the SEC said that staking didn't automatically qualify as securities transactions, in a 180-degree shift from just a couple years earlier when it sued several exchanges and service providers for violating security laws and operating as unregistered brokers. The U.S.'s largest publicly traded centralized crypto exchange Coinbase (COIN) was among them, but the regulator dropped its case against it in February. The clarifying note also cracks open the door for ETF issuers that have asked for approval to offer staking; crypto ETFs with staking services exist outside of the US. However, the SEC's analyses of crypto activities haven't been codified into law through a formal rule-making process, so they can change under new leadership. Read the original article on Investopedia
Yahoo
06-08-2025
- Business
- Yahoo
Ex-SEC staff warns of another Lehman Brothers collapse
Ex-SEC staff warns of another Lehman Brothers collapse originally appeared on TheStreet. Amanda Fischer, the former Chief of Staff at the Securities and Exchange Commission (SEC), has issued a blunt warning following the regulatory agency's Division of Corporation Finance revealing its latest stance on liquid staking activities. On Aug. 5, the Division released a statement as per which certain liquid staking activities associated with protocol staking don't constitute the sale of securities, and therefore, parties associated with these activities need not register with the SEC under the securities laws. Let's first break down the concept of liquid staking. Crypto staking refers to the process of staking or locking up your digital assets like Ethereum to help secure a proof-of-stake (PoS) blockchain and earn rewards in staking goes one step further and lets you not only stake your crypto assets in exchange for rewards but also doesn't lock up those assets and instead makes them liquid so that they can continue to be traded. This is how the process takes place. When you stake your crypto assets, you receive a tokenized version of these assets, such as sETH, which can be traded in the market. While the SEC Chairman Paul Atkins hailed the statement for offering clear guidance on crypto, Fischer slammed it as giving validation to "rehypothecation" that led to the collapse of the Lehman Brothers. Rehypothecation is the practice of a lender using collateral received from a borrower for their own benefit, often to secure their own loans or participate in other transactions. Note that the practise played a crucial role in the Lehman Brothers collapse and subsequent 2008 financial crisis. Since the new guideline allows rehypothecation in crypto without the SEC or Fed's oversight, it's worse, Fischer crypto assets and receiving duplicate tokens for trading is no different from Lehman Brothers borrowing customers' assets and using them as collateral to make other bets in the market, she warned. Akin to 30x bets on subprime mortgage If these "synthetic" tokens fail or get hacked, it can exacerbate losses, she cautioned. "Assets can also be restaked and restaked and restaked - generating synethic token upon synthetic token. It begins to look a lot like the leverage on derivatives tied to mortgages. A subprime mortgage is a risk to one bank - but when there are 30x bets on that mortgage? Woof" Fischer also underlined how long the wait times are for unstaking crypto assets. While such an activity in traditional securities markets is heavily regulated, the SEC is letting the crypto industry get away with it, she added. Ex-SEC staff warns of another Lehman Brothers collapse first appeared on TheStreet on Aug 6, 2025 This story was originally reported by TheStreet on Aug 6, 2025, where it first appeared. Sign in to access your portfolio
Crypto Insight
06-08-2025
- Business
- Crypto Insight
US SEC says certain liquid staking activities fall outside of securities laws
The US Securities and Exchange Commission (SEC) has clarified that certain cryptocurrency liquid staking activities do not constitute securities offerings, a notable step in the agency's ongoing effort to provide clearer guidance on digital asset regulation. 'The statement clarifies the division's view that, depending on the facts and circumstances, the liquid staking activities covered in the statement do not involve the offer and sale of securities,' the regulator said Tuesday, referring to key sections of the Securities Act of 1933 and the Securities Exchange Act of 1934. In its Staff Statement, the SEC defined liquid staking as the process of staking digital assets through a protocol and receiving a 'liquid staking receipt token,' which serves as evidence of the staker's ownership. 'Today's staff statement on liquid staking is a significant step forward in clarifying the staff's view about crypto asset activities that do not fall within the SEC's jurisdiction,' SEC Chair Paul Atkins said in a statement. The SEC's clarification comes amid rising institutional interest in liquid staking exchange-traded funds (ETFs), with firms like Jito Labs, VanEck and Bitwise urging the agency to approve liquid staking strategies for Solana (SOL)-based funds. Liquid staking has become one of the largest subsectors in crypto, with total value locked (TVL) nearing $67 billion across all protocols, according to DefiLlama. Ethereum alone accounts for $51 billion of that total. SEC adopts pro-crypto approach under Paul Atkins The announcement follows the SEC's launch of Project Crypto — a sweeping initiative to overhaul the regulatory framework for cryptocurrency trading in the United States. As SEC Chair Paul Atkins noted last week, the project was developed in response to recommendations from the White House's Working Group on Digital Assets Since taking office, Atkins has led a more lenient approach to digital asset regulation, moving away from the agency's prior 'regulation by enforcement' stance under former Chair Gary Gensler. That shift included a May clarification that proof-of-stake protocols do not constitute securities transactions. Under Atkins's leadership, the SEC has also taken meaningful steps to ease regulatory burdens on cryptocurrency exchange-traded funds (ETFs). Notably, on July 29, the agency approved in-kind creations and redemptions for Bitcoin and Ether ETFs, allowing authorized participants to exchange ETF shares directly for the underlying assets rather than cash. The US crypto industry is also gaining momentum from sweeping policy reforms designed to make digital assets more accessible. These include the passage of the GENIUS Act, a landmark stablecoin bill, and House approval of market structure and anti-CBDC legislation ahead of the August recess. Source:
Yahoo
06-08-2025
- Business
- Yahoo
SEC Says Liquid Staking Doesn't Run Afoul of Securities Laws
Participants in liquid staking, including depositors and providers, do not need to worry about securities law disclosures, the U.S. Securities and Exchange Commission said in a staff statement on Tuesday. The statement, published by the Division of Corporation Finance, is specific to liquid staking, where participants deposit "covered crypto assets" into a third-party staking protocol provider, which in turn provides receipt tokens to the depositors. Liquid staking allows users to lock up tokens in proof-of-stake blockchains while still maintaining access to their funds through derivative tokens. These tokens can then be used for various DeFi activities. Currently, liquid staking across all blockchains has nearly $67 billion in total-value-locked (TVL), with $31.7 billion in Lido, according to DefiLlama data. Tokens tied to a number of liquid staking protocols, including Lido, Jito and Rocket Pool, went up marginally after the SEC statement was published, but are still down on the day's trading, CoinGecko showed. To be sure, the SEC had previously published another staff statement addressing other forms of staking. Similar to the previous statement, Tuesday's note on liquid staking is not the same as binding guidance from the Commissioners or regulations that have gone through the SEC's formal rulemaking process. However, the new statement does signal how the agency is thinking about the issue and suggests that any crypto industry participant who follows the guidance will not be sued by the regulator. Tuesday's statement is specific to what liquid staking providers do, "including their roles in connection with the earning and distribution of rewards, slashing, and the minting, issuing and redeeming of Staking Receipt Tokens," as well as other ancillary services. The main caveat is that the deposited crypto assets cannot be "part of or subject to an investment contract." "In a Liquid Staking arrangement, the Liquid Staking Provider (whether a Node Operator or not) does not provide entrepreneurial or managerial efforts to Depositors for whom it provides this service," the statement said. "These arrangements are similar to those discussed in the Protocol Staking Statement with respect to 'Custodial Arrangements.' The Liquid Staking Provider does not decide whether, when, or how much of a Depositor's Covered Crypto Assets to stake and is simply acting as an agent in connection with staking the Covered Crypto Assets on behalf of the Depositor," the statement said. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
