The SEC staff's statement on liquid staking has drawn various opinions within the crypto space. Some view it as a step towards wider acceptance of cryptocurrencies, while others raise concerns about uncertainty and potential risks.
SEC Guidance and Industry Perspectives
According to SEC staff statements, liquid staking assets are not classified as securities. However, this opinion has led to mixed reactions in the crypto industry, opening a discussion about legal uncertainties.
SEC Commissioner Caroline Crenshaw criticized the new guidance for its inadequacy and vagueness. She noted:
> "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."
Crenshaw also pointed out two major gaps in the SEC guidance: the unclear operational structure of liquid staking and the lack of legal protection for compliance.
Regulatory Challenges in Liquid Staking
Liquid staking, which allows users to earn rewards while keeping their funds usable, has various operational models among platforms. As Crenshaw stated, the SEC guidance may not cover these different frameworks.
Lido Labs Chief Legal Officer Sam Kim noted that regulatory questions remain regarding concepts such as "restaking" and "cross-chain staking," emphasizing the need for further legal clarity. SOL Strategies Chief Strategy Officer Michael Hubbard mentioned that staking networks performing basic tasks may comply with the new rules, but any deviation could change their regulatory status.
Taxation on Staking Rewards and Associated Risks
The SEC guidance also failed to provide clarity on the taxation of staking rewards. Key notes include:
* Uncertainty on timing: it is unclear when taxes apply to rewards—upon receipt or sale. * Ongoing legal cases: courts are currently reviewing this question. * Policy advocacy: industry groups are urging Congress for fairer tax rules. * Grantor trust hurdle: existing tax rules create challenges for including staking in exchange-traded funds (ETFs).
Former SEC Chief of Staff Amanda Fischer compared liquid staking to risky financial maneuvers that led to the Lehman Brothers collapse in 2008. She warned that liquid staking could pose a threat if not properly regulated.
The discussion surrounding the SEC guidance highlights the need for further research and dialogue in the field of liquid staking regulation to ensure safe and transparent operations in this area of the cryptocurrency space.
