The Crypto industry hails the latest US Securities and Exchange Commission guide to liquid staking as a rare regulation win, along with stakeholders called the main steps for decentralized finance and adoption of institutional digital properties.
Released on Tuesday, the SEC staff released a guide to liquid staking.
“Institutions can now be confident to integrate LSTs into their products that will surely drive new income streams, expand customer bases, and enable creation of a second market for staked assets,” Mara Schmiedt, CEO of Blockchain Developer company Alluvial to cointelegraph.
This decision sets the stage for a wave of new products and services that will accelerate basic participation in digital asset markets. “
Crypto companies are looking for regulatory guidance from SEC to liquid tokens. On Thursday, a group of Solana stakeholders Write a letter to the SEC pushing for their integration with the funds that have been exchanged.
Liquid staking is the process of depositing crypto assets to a third-party provider and receiving staking acceptance tokens. These receipt tokens can be exchanged or used with Defi without awaiting unstable funds.
“Today’s guide to liquid staking shows the same annoying understanding of the LST technology shown by the Crypto Task Force when we met them on this topic in February,” Jito Labs CEO Lucas Bruder told cointelegraph.
Despite apparent support from the crypto industry, the guidance of Liquid staking of the SEC has drawn criticism from within the agency. Commissioner Caroline Creshaw released a sharp dissentWarning that the statement relies on trembling assumptions and offers a little regulation.
Related: What is liquid staking, and how does it work?
Liquid activities under the Howey Test
Katherine Dowling, general advice and chief of compliance with Bitwise said “It is clear that the SEC is that some liquid staking activity is not involved in security and therefore is not required to register.”
If an activity qualifies is likely to depend on a major Howey test element, the legal standard used to determine if a owner or transaction generates a security offer.
For liquid staking providers, only the conduct of “administrative or ministerial” operations, such as the release of tokens that represent the owner of staked assets, may not trigger security registration requirements, according to the agency.
This includes releases of the “staking receipt token,” which is how the SEC determines the depositors of crypto assets for liquid staking their crypto assets.
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“In analyzing the economic facts of a transaction, the test is whether there is a money investment in a common business dedicated to a rational revenue derived from the efforts of the entrepreneur or management of others,” wrote the SEC.
The institution’s adoption wave can help retail traders and affect the offer of defi services. “Retail platforms can attract more users by providing seamless access to staking rewards without locking barriers, while greater ecosystems benefit from increased liquidity and change,” Schmiedt said.
Magazine: SEC U-Turn to Crypto leaves key questions that are not answered
