SEC Exempts Lido and Jito From Securities Laws in Major Win for Liquid Staking Protocols

Key Takeaways:The U.S. SEC has officially exempted non-custodial liquid staking protocols like Lido (Ethereum) and Jito (Solana) from securities regulations.This sets a regulatory precedent for decentralized finance (DeFi) protocols offering non-custodial staking services.Lido currently holds over 30% of staked ETH, while Jito is a major provider of Solana staking and MEV infrastructure.The move is seen as part of the SEC’s broader Project Crypto regulatory alignment.SEC Clears Lido and Jito From Securities ScrutinyIn a landmark regulatory development, the U.S. Securities and Exchange Commission (SEC) has formally exempted liquidity pledge agreements—including major staking protocols Lido and Jito—from being classified as securities, according to a report from ChainCatcher.The announcement is a significant win for non-custodial staking platforms operating within Ethereum and Solana's ecosystems, and could reshape the U.S. regulatory landscape for decentralized finance (DeFi).A Precedent for Non-Custodial Liquid StakingThe SEC's decision clarifies that non-custodial staking protocols—which allow users to maintain control of their assets while participating in network consensus—do not constitute investment contracts under current U.S. securities law.This classification removes a major overhang for leading protocols such as Lido, which manages more than 30% of staked ETH, and Jito, a key infrastructure provider for Solana’s MEV and staking services.The ruling is expected to catalyze innovation across DeFi by reducing regulatory uncertainty around staking-as-a-service.Implications for Ethereum, Solana, and DeFi at LargeBy exempting these protocols from securities classification, the SEC is effectively legitimizing liquid staking as a compliant financial primitive, provided it remains non-custodial and decentralized in nature.This could boost institutional participation in DeFi, especially on Ethereum, where Lido has long been a dominant player, and on Solana, where Jito has helped expand staking yields through MEV sharing.Part of the SEC’s Broader Project Crypto InitiativeThe exemption is reportedly part of the SEC’s ongoing Project Crypto, a framework aimed at distinguishing decentralized protocols from centralized entities in the digital asset space. The SEC appears to be taking a function-based approach to regulation—focusing on whether a protocol grants custodial control or investor-like rights.This could pave the way for other liquid staking protocols to seek similar treatment, especially if they can demonstrate decentralized governance and user custody.The SEC’s move to exempt Lido and Jito marks a pivotal moment for liquid staking and DeFi regulation in the U.S. It may open the door for broader adoption of compliant, yield-generating products within crypto—while reinforcing the importance of decentralization and user control in staking design.As Ethereum and Solana continue to evolve, this regulatory clarity could unlock new institutional flows and support the maturation of DeFi staking ecosystems.