SEC’s Recent Ruling on Ethereum Staking Could Pave the Way for Future Crypto ETFs

• SEC’s ruling allows Lido and Jito to operate without securities regulation.

• Liquid staking tokens like stETH and mSOL are now classified differently, reducing legal risks.

• This decision could accelerate institutional interest in Ethereum and Solana staking.

The SEC’s exemption of liquid staking protocols marks a pivotal moment for Ethereum and Solana, potentially boosting their market positions.

What is Liquid Staking?

Liquid staking is a process that allows users to stake their cryptocurrencies while maintaining liquidity through tokens like stETH and mSOL. The SEC’s recent ruling clarifies that these tokens are not classified as securities, enabling broader adoption.

Why is the SEC’s Ruling Important?

The SEC’s decision to exempt liquid staking protocols from securities laws is crucial for the crypto market. It reduces legal uncertainties and encourages institutional investment in Ethereum and Solana, potentially leading to increased market stability.

Frequently Asked Questions

What are the benefits of liquid staking?

Liquid staking allows users to earn staking rewards while still having access to their assets through liquid tokens, enhancing flexibility and investment opportunities.

How does the SEC’s decision affect Ethereum and Solana?

The SEC’s decision provides regulatory clarity, which is expected to attract more institutional investors to both Ethereum and Solana, potentially increasing their market value.

Key Takeaways

• Regulatory Clarity: The SEC’s ruling removes legal uncertainties for liquid staking.
• Market Impact: This decision is likely to boost institutional interest in Ethereum and Solana.
• Future Growth: Expect more clarity and regulations to emerge in the crypto space.

Conclusion

The SEC’s exemption of liquid staking protocols marks a significant advancement for Ethereum and Solana, enhancing their appeal to institutional investors. As the crypto landscape evolves, this decision could lead to further regulatory clarity and growth opportunities.

• The SEC’s recent decision to exempt Ethereum and Solana’s liquid staking protocols from securities laws is a significant win for the crypto sector, paving the way for staking ETFs.

• Liquid staking tokens like stETH and mSOL are now classified differently, reducing legal risks.

• This decision could accelerate institutional interest in Ethereum and Solana staking.

The SEC’s exemption of liquid staking protocols marks a pivotal moment for Ethereum and Solana, potentially boosting their market positions.

SEC Gives Crypto Staking The Green Light

The SEC is going on offense right now with respect to crypto. In a very good way. The SEC has formally exempted major Ethereum and Solana staking protocols, Lido and Jito, from securities laws. This ruling means that their staking services, and the liquid staking tokens they issue (stETH, mSOL, jitoSOL, etc.), will not be treated as securities under U.S. regulations.

What They’re Saying

“SEC says certain liquid staking tokens are NOT securities… Think last hurdle in order for SEC to approve staking in spot eth ETFs. The reason? Liquid staking tokens will be used to help manage liquidity w/in spot eth ETFs, something that was a concern for SEC.” – Nate Geraci, on X

“The SEC continues to provide clarity––today, it’s liquid staking. In a detailed statement, they carefully demonstrate why ordinary liquid staking activities should not be regulated under securities laws. Huge win.” – Miles Jennings, on X

Why It Matters

This is a major win for Ethereum and Solana, and for the broader crypto DeFi sector. For months and years, crypto staking was in a gray zone. That’s no longer the case. The SEC’s move does more than remove legal risk for Lido and Jito; it clears the path for non-custodial, protocol-level staking.

For ETH: Lido’s dominance (over 30% of all staked ETH) means this effectively safeguards a huge slice of Ethereum’s economy. For SOL: Jito is central to Solana’s staking and MEV infrastructure, so regulatory clarity could accelerate institutional interest. For DeFi: This could set a precedent for other decentralized protocols that operate without a central operator, especially in areas like restaking, liquid restaking, and cross-chain staking derivatives. For ETFs: Staking is very likely to be approved for both ETH and SOL.

But perhaps the biggest takeaway of all – the SEC is making good on their promises and guidance laid out in Project Crypto. And they’re accelerating. Expect more clarity like this to keep on coming…

Despite the bullish news, ETH was still down 1% on the day.

Macro Crypto and Memes

A few Crypto and Web3 headlines that caught my eye:

• Crypto majors are slightly red after Monday’s rebound; BTC -0.3% at $114,300, ETH -1% at $3,630, XRP -4% at $2.95, SOL -4% at $164.
• PUMP (+6%), MNT (+3%) and TRON (+1%) led top movers.
• ETH ETFs flipped green again on Tuesday with $73.3M in inflows after a 2-day outflow streak; the BTC ETFs are now on a 4-day outflow streak.
• The SEC confirmed that Ethereum staking protocols such as Lido and Solana’s Jito were exempted from SEC securities laws.
• Stablecoin usage hit a new ATH of $1.5T in July.
• Coinbase launched an Embedded Wallets SDK letting developers integrate stablecoin-friendly crypto wallets directly into apps with simple logins, removing seed phrase friction.
• Coinbase also plans to raise $2B via a convertible note offering.
• Solana began shipping its second generation of Seeker smartphones.

In Corporate Treasuries

SharpLink Gaming increased its Ethereum holdings to 521,939 ETH (~$1.9B), adding 83,561 ETH ($307M) in the past week. Strategy and Trump Media absorbed much of Galaxy Digital’s ~80,000 BTC ($9B) sale, boosting their corporate bitcoin treasuries and alleviating broader market pain. Upexi announced it now holds over 2M SOL ($335M), trading at 1.6x mNAV. CEA Industries raised $500M for its BNB treasury, while MEI Pharma purchased $100M of LTC for its treasury.

In Memes

Memecoin leaders are mostly red on the day; DOGE -3%, Shiba -2%, PEPE -3%, BONK -7%, PENGU -7%, TRUMP -2%, SPX -2%, and FARTCOIN -7%. Pump Fun reflipped LetsBonk in volume, traders and tokens bonded according to Jupiter’s data (now 55% market share). TROLL jumped another 60% to $190M and a new ATH; HOUSE (+70%), SPARK (+450%), BUCKY (+30%) and CHILLHOUSE (+20%) led notable movers.

Token, Airdrop & Protocol Tracker

Here’s a rundown of major token, protocol and airdrop news from the day:

• Succinct Labs launched its PROVE token, debuting at $237M ($1.2B fdv).
• Towns Protocol debuted its TOWNS token and airdrop, with TOWNS debuting at $86M market cap ($630M fdv).
• MoonPay introduced Virtual Accounts in partnership with Axal, offering automatic onchain yield (6-10% apy on stables), savings and DeFi tech.
• Base briefly went down for 29 minutes on Tuesday where block production was halted.
• Hyperliquid earned 35% of all blockchain revenue in July according to data from Artemis.

AI x Crypto

Overall market cap down 2% to $10.35B, leaders were mostly red. FARTCOIN (-7%), VIRTUAL (-4%), TIBBIR (+7%), ALCH (-5%), & ai16z (-5%). GAMBLE (+200%), DARK (+70%) and TETSUO (+16%) led top movers.

What is happening in NFTs?

Here is the list of other notable headlines from the day in NFTs:

• ETH NFT leaders were mostly even; Punks even at 51.5 ETH, Pudgy -1% at 14, BAYC +1% at 12 ETH.
• Mooncats (+30%) and Otherdeeds (+20%) led notable top movers.
• Bitcoin NFTs were mostly red or even.
• Abstract NFTs were mostly green, led by Noah’s Ark (+160%) and Klara (+27%).
• An Ape CryptoPunk sold for 720 ETH ($2.58M) in the biggest Punk sale in months (Punk floor unchanged at 51.5 ETH).
• XCOPY’s ‘hello admin dm me’ sold for 65 ETH ($232,700) on Gondi.
• A Skeleton Meebit sold for 23.8 ETH ($85,811).