Statement Summary
The Division of Corporation Finance recently issued a statement regarding liquid staking activities aimed at clarifying the application of federal securities laws to crypto assets. However, the statement has been criticized for introducing confusion rather than clarity, due to its reliance on numerous unverified factual assumptions about how liquid staking operates. These assumptions create a tenuous foundation for the statement’s legal conclusions, which are only valid if all assumed conditions are met. The statement emphasizes that if a liquid staking activity deviates from these assumptions, legal interpretations may differ. Ultimately, the statement offers little assurance to those involved in liquid staking, suggesting that entities should exercise caution in their operations.
Original Statement
Some things are better left unsaid. Today, the Division of Corporation Finance spoke in the form of a statement on liquid staking activities that purports “to provide greater clarity on the application of the federal securities laws to crypto assets.” But instead of clarifying the legal landscape, today’s statement, like other recent staff statements before it, only muddies the waters.
This lack of clarity principally stems from two sources. First, the Liquid Staking Statement stacks factual assumption on top of factual assumption on top of factual assumption, resulting in a wobbly wall of facts without an anchor in industry reality. Without reference to any supporting authority that might validate that its factual claims actually map onto how liquid staking operates in practice, the Liquid Staking Statement makes a series of definitive declarations about how liquid staking works. It thus might not reflect prevailing conditions on the ground.
Second, although largely buried in footnotes, the staff repeatedly cautions readers that the Liquid Staking Statement’s broad legal conclusions apply only if those many factual assumptions hold. In other words, the legal conclusions in the statement are circumscribed by the staff’s plentiful assumptions about liquid staking. And, to the extent that any particular liquid staking activity deviates from the numerous factual assumptions laid out in the Liquid Staking Statement, that activity is outside the statement’s scope.
Given its unsupported factual assumptions and circumscribed legal analysis, the Liquid Staking Statement should provide little comfort to entities engaged in liquid staking—especially since, as the statement rightly notes, it only “represents the views of the staff of the Division of Corporation Finance,” not the views of this or any future Commission. 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.
References
- See Division of Corporation Finance, Statement on Certain Liquid Staking Activities (Aug. 5, 2025) (“Liquid Staking Statement”).
- See, e.g., Commissioner Caroline A. Crenshaw, Response to Staff Statement on Protocol Staking Activities: Stake it Till You Make It? (May 29, 2025) (“But unfortunately, as with the Division’s other recent Howey statements, the conclusions here are vague generalizations that cannot readily be mapped onto real-world services.”).
- The Liquid Staking Statement builds upon and borrows definitions from a prior staff statement on protocol staking activities. See Division of Corporation Finance, Statement on Certain Protocol Staking Activities (May 29, 2025). As such, many of the concerns I expressed in my response to the staff statement on protocol staking activities also apply to the Liquid Staking Statement.
- See, e.g., Liquid Staking Statement n.11 (“Where facts vary from those presented in this statement, the Division’s view as to whether the specific Liquid Staking Activity involves the offer and sale of a security may be different.”); id. at n.18 (“If a Liquid Staking Provider does select whether, when, or how much a Depositor’s Covered Crypto Assets to stake, its activities are outside the scope of this statement.”); id. at n.24 (“Where a Liquid Staking Provider provides the means by which the Staking Receipt Tokens can be used to generate such returns, those activities are outside the scope of this statement.”).
- Liquid Staking Statement.
