How SEC Clears Path for Liquid Staking in Spot Crypto ETFs

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According to the latest SEC statement, the SEC staking guidance now makes it clear that some types of staking are not considered securities. This change opens the way for spot Ethereum (ETH) and Solana (SOL) ETFs to add staking and earn rewards. The decision gives investors a chance to benefit from staking without breaking any rules.

What Does the SEC Staking Guidance Say?

The SEC shared its view on staking on May 29, 2025. It said that solo staking, self-custodial staking, and some custodial staking do not fall under securities law. These are called “protocol staking activities.” They follow network rules and do not depend on a company or team to make money for others.

That means people who stake their tokens in these ways are helping the network, not investing in a business. So, these actions do not pass the Howey Test, which decides if something is a security.

Ethereum staking regulation — What Does the SEC Staking Guidance Say?

How It Affects Spot ETH and SOL ETFs

Before this update, many ETF providers avoided staking. They didn’t want to risk breaking SEC rules. But now, the SEC staking guidance gives them more confidence.

Nate Geraci, president of The ETF Store, said, “This clears the last major hurdle for staking in spot ETH ETFs.” This means ETF companies like BlackRock and VanEck can now design funds that offer both price exposure and staking rewards.

BlackRock recently filed a plan to add staking to its iShares Ethereum Trust. They want to earn extra returns from Ethereum staking, which can bring about 3% yearly.

Which Staking Types Are Allowed?

Staking Method	Status	Notes
Solo staking	Allowed	You run your own validator
Self-custodial staking	Allowed	You keep control while using a third party
Custodial staking (with limits)	Allowed	You own the funds and the service only helps
Liquid staking tokens (LSTs)	Unclear	Not fully covered by the guidance

What the Crypto Market Is Doing

After the SEC staking guidance, ETF providers started updating their applications. Some are preparing to include staking in their funds before the end of 2025.

REX Financial launched a Solana ETF that uses staking rewards. Other funds may follow.

Ethereum staking is also growing. Over 34 million ETH are now staked, with average returns between 3% and 4%.

Some platforms, like Uphold, had paused staking for U.S. users earlier this year. With this new guidance, they may start offering it again.

What Experts Are Saying

Law firm Lowenstein Sandler LLP said this guidance proves that staking is a network task, not an investment. They believe this gives more clarity to users and companies.

Not everyone agrees. SEC Commissioner Caroline Crenshaw disagreed with the update. She said it only works for ideal cases and doesn’t match real-world staking services. She worries some companies will use this to avoid the law.

What About Taxes on Staking in ETFs?

While the SEC staking guidance gives regulatory clarity, tax treatment is still a missing piece. The IRS has not yet confirmed how staking rewards inside ETFs will be taxed. Fund managers and legal experts are waiting to learn whether rewards will count as regular income or if they’ll receive deferred treatment. Until the IRS gives clear rules, ETF issuers may hold off on launching full staking strategies, even with SEC approval in hand.

Conclusion

Based on the latest research, SEC staking guidance makes it clear that staking is not always a security. This gives ETFs a safe way to include staking rewards. As the crypto market grows, this rule can help more people earn passive income without breaking regulations. ETF providers now have a more straightforward path to bring staking to mainstream investors.

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Summary

The SEC staking guidance confirms that solo, self-custodial, and specific custodial staking methods do not qualify as securities. This update clears a path for spot ETH and SOL ETFs to include staking rewards legally. While liquid staking remains under review, the guidance boosts confidence for issuers and investors. It marks a step forward in blending regulatory clarity with crypto innovation, allowing staking to support long-term yield in compliant investment products.