SEC Takes Major Step Towards Allowing Staking in Crypto ETFs
The US Securities and Exchange Commission (SEC) has just dropped some significant guidance on liquid staking, and it’s got the crypto community buzzing. Essentially, the SEC is saying that liquid staking activities don’t involve the sale of securities, which is a huge hurdle cleared on the path to allowing staking within spot crypto exchange-traded funds (ETFs). Nate Geraci, co-founder of The ETF Institute, is calling this guidance “the last hurdle” before the SEC can give the green light to staking in spot Ethereum (ETH) ETFs.
What Does This Mean for the Industry?
The SEC’s guidance is a big deal because it paves the way for the use of liquid staking tokens (LSTs) to manage liquidity inside funds. This is a key concern for the Commission, and it looks like they’re finally getting on board with the idea. LSTs allow funds to keep staked exposure liquid, which means they can maintain on-chain staking rewards while still holding a transferable receipt token that can be used for all sorts of portfolio operations. It’s a win-win for everyone involved.
Industry Players Weigh In
The SEC’s guidance builds on a previous staff view from May 29, which said that other forms of protocol staking don’t require registration. It’s all part of a larger trend towards greater clarity and regulatory certainty in the crypto space. Of course, there are still some caveats – the SEC is emphasizing that its view only applies to specific fact patterns and administrative roles. But overall, this is a major step forward for the industry, and it’s likely to have a big impact on the development of crypto ETFs in the months and years to come.
What’s Next?
Now that the SEC has given its blessing to liquid staking, we can expect to see more innovation in the space. Fully-staked ETFs via LSTs could be just around the corner, and that would be a game-changer for investors. As Bruder said, “We will see expanded use for LSTs in both traditional and novel financial instruments, including ETFs.” It’s an exciting time for crypto, and it’ll be interesting to see how things play out from here.
