Turning point: US SEC clarifies that liquidity pledge does not involve securities issuance

The latest guidance on liquidity staking issued by SEC staff has fueled market expectations that U.S. regulators will soon allow cryptocurrency spot ETFs to conduct staking operations.

ETF Institute co-founder Nate Geraci called the guidance the "final hurdle" before the SEC can approve an Ethereum spot ETF to conduct staking operations.

Furthermore, he pointed out that Liquidity Staking Tokens (LSTs) will be used to manage internal fund liquidity

, which is a core issue of concern to the SEC. His view is consistent with the SEC’s Division of Corporation Finance’s position that liquidity staking activities, as structured as described, do not involve the issuance or sale of securities. Furthermore, Staking Receipt Tokens (SRTs) serve merely as receipts for the underlying assets and are not themselves securities. LSTs allow funds to maintain liquidity in their staking exposure and maintain on-chain staking rewards, while holding a transferable receipt token that can be used for portfolio operations, staking, or redemption without fully unstaked positions. Jito Labs CEO Lucas Bruder said in a statement that the guidance reflects an "extremely detailed understanding" of the current liquidity staking mechanism. He added: “We will see an expansion of the use of LSTs in both traditional and new financial instruments, including ETFs.” Regarding the impact of this decision, Bruder looks forward to the listing of fully collateralized ETFs enabled by LSTs. Jito Labs’ CEO and other industry participants met with the SEC in mid-February to discuss ETF collateralization rules. According to the meeting minutes, the two sides discussed LSTs to address the SEC's concerns about redemption time limits. Participants emphasized that LSTs within the ETP framework can avoid direct participation in the staking process, thereby streamlining the process. This guidance on liquidity staking builds on the May 29th staff opinion, stating that other forms of agreement-based staking also do not require registration, and features such as early redemption and penalty protection do not, in themselves, convert a pledge into a securities offering. However, the SEC emphasized that its opinion applies only to administrative and transactional service provider roles and specific factual scenarios. Therefore, mechanisms outside these ranges may be treated differently.