New guidance from US Securities and Exchange Commission staff says the tokens people receive for staking ether are not securities, as long as they work purely as receipts for the underlying coins. The Division of Corporation Finance published the FAQ on Friday, the same agency that three years ago made a crypto exchange pay $30 million over its staking service.
The guidance covers three areas at once: staking receipt tokens, token buybacks, and what counts as managerial effort under the Howey test, the Supreme Court framework used to decide whether an asset is an investment contract. Staff said staking receipts that prove ownership of the staked asset without changing the holder’s rights or obligations can be treated as digital commodities.
A reversal from the Kraken era
In February 2023, Kraken paid $30 million and shut down its US staking service to settle SEC charges. The agency said Kraken advertised annual returns as high as 21 percent and acted as an unregistered securities dealer. The case chilled staking-as-a-service offerings in the United States for two years, and rivals including Coinbase restructured their own products to limit exposure.
The new FAQ moves in the opposite direction. Staff wrote that once a crypto network reaches functional status, work on security maintenance, upgrades, feature improvements and network promotion, including funding development, does not typically constitute the key managerial efforts the Howey test looks for. If those efforts do not qualify, the investment contract prong fails and the token is not a security on that basis.
Buybacks got similar treatment. For functional networks, token buybacks are usually seen as treasury management rather than an effort to create profit expectations. The distinction matters: on networks that lack real functionality, buybacks promoted as generating returns for holders can still raise securities concerns.
The Howey logic here is narrow but deliberate. The test asks whether a buyer relies on the efforts of others for profits. The staff answer is that maintaining a working network is not the kind of entrepreneurial effort Howey targets, which brings the SEC’s crypto staff position closer to how commodity regulators have long treated staking in proof of stake networks.
What it means for ether holders
For Ethereum, the practical effect is clarity for liquid staking. Tokens like stETH represent staked ether and accrue rewards. Under the staff view, they are receipts, not securities, provided they do not alter the holder’s rights. That removes a legal overhang that has followed liquid staking protocols since the Kraken action.
The timing lands on an Ethereum market already absorbing other news. Ether traded near $2,690 on Saturday, up roughly 9 percent this month. Spot ether ETFs have recorded steady inflows, and the SEC clarification arrives alongside the launch of staked ether ETF products from major asset managers earlier this year.
Roughly 1.68 million ETH sits in the queue waiting to be staked, with about 154,000 ETH ready to exit, according to Yahoo Finance reporting on validator data. Legal certainty over receipt tokens removes one more reason institutions hesitated to route ether through staking rather than holding it idle.
Caveats remain. The SEC noted the FAQ represents staff views only and lacks the force of law. Staff guidance can shift with commission composition, and Commissioner Hester Peirce, the commission’s most consistent crypto advocate, departs October 2, leaving two seated members. Courts have not ruled on the specific positions in the FAQ, and a future commission could withdraw it the way past staff positions have been withdrawn.
Industry reaction
Staking providers and exchanges have pushed for exactly this kind of clarification since 2023. Several resumed or expanded US staking services after the 2024 election changed the commission’s posture, but liquid staking tokens sat in a gray area because they trade freely and can be used as collateral in decentralized finance.
The FAQ addresses that directly. A receipt token that can be sold or used as collateral is still a receipt if it simply tracks the staked position. Whether a specific product qualifies will depend on its design, and securities lawyers expect issuers to restructure documentation to fit the staff’s framing.
The distinction between a receipt and a claim has consequences beyond Ethereum. Wrapped tokens, liquid restaking receipts and exchange-issued staking derivatives all borrow the same structure. If the staff view holds, product teams can model their obligations around custody and accurate representation rather than securities disclosure, a materially cheaper compliance posture.
Enforcement questions do not disappear entirely. A staking product that promises returns, manages validator selection opaquely, or markets itself on the operator’s skill could still trip Howey. The FAQ draws a line, it does not abolish the test. Expect the next disputes to focus on exactly where products sit relative to that line.
The broader shift is visible across the agency’s crypto work this year. The commission has issued guidance on memecoins, mining, stablecoins and now staking, mostly through staff statements rather than formal rules. That approach is faster but less durable than rulemaking, and market participants know it. Legislative efforts such as the stalled market structure bill would lock in clearer boundaries, but that process fizzled in Congress this month.
For now, the direction is unambiguous. The same agency that forced Kraken out of staking is telling the market that staked ether receipts are commodities. Staking volumes, liquid staking protocol growth and institutional ether products all get a clearer runway than they had three years ago, and the question shifts from whether staking is legal to how fast the product stack can rebuild around it.