The SEC’s Division of Corporation Finance has released a statement regarding liquid staking, also known as ‘protocol staking,’ stating that it does not involve the offer and sale of securities. This means that participants in liquid staking activities do not need to register with the Commission under the Securities Act. The statement was issued to provide clarity on the application of federal securities laws to crypto assets, specifically in regards to staking tokens. These tokens represent ownership of the deposited crypto and any staking rewards, while allowing holders to maintain liquidity. The SEC determined that staking providers only perform administrative functions and do not engage in entrepreneurial or managerial efforts, making them exempt from securities laws. This could be the last hurdle for the SEC to approve staking in spot ETH ETFs, as these tokens will be used to help manage liquidity in these funds. If approved, it could send ETH into new price discovery and to a new all-time high.
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