U.S. Securities and Exchange Commission (SEC) has clarified that certain liquid staking activities and associated Staking Receipt Tokens do not constitute securities under federal securities laws, specifically Section 2(a)(1) of the Securities Act of 1933 and Section 3(a)(10) of the Securities Exchange Act of 1934.

This guidance, issued by the SEC’s Division of Corporation Finance on August 5, 2025, states that liquid staking—where crypto assets are staked through a protocol or provider and a liquid staking receipt token is issued to evidence ownership—does not meet the criteria for an investment contract under the Howey Test.

The key reason is that the value of these tokens and any rewards are tied to the underlying crypto assets and protocol staking activities, not the entrepreneurial or managerial efforts of the staking provider or third parties.

As a result, participants in these liquid staking activities, including providers minting, issuing, or redeeming Staking Receipt Tokens, are not required to register these transactions with the SEC or seek exemptions, unless the underlying crypto assets are themselves part of an investment contract.

This clarification, part of the SEC’s Project Crypto initiative under Chair Paul Atkins, aims to provide regulatory clarity and has been welcomed by market participants for reducing uncertainty around decentralized finance (DeFi) protocols.

However, some, like Commissioner Caroline Crenshaw, argue that certain staking services might still be securities based on prior court rulings, highlighting ongoing debates within the SEC. By exempting liquid staking activities from securities registration, the SEC alleviates the need for staking providers and DeFi protocols.

Protocols can now operate with greater confidence, knowing that their liquid staking activities are not subject to federal securities laws, as long as the underlying crypto assets are not investment contracts. Liquid staking, which allows users to stake assets while retaining liquidity through tradable receipt tokens (e.g., stETH on Lido), is a cornerstone of DeFi.

The SEC’s stance encourages broader participation by retail and institutional investors, as the regulatory risk of staking tokens being deemed securities is diminished. This could lead to increased capital inflows into DeFi protocols, as investors gain assurance that liquid staking tokens are not subject to the same scrutiny as securities.

Developers can innovate more freely in designing staking mechanisms, yield farming strategies, and tokenized derivatives without fear of SEC enforcement actions. This fosters experimentation with new DeFi products and services. The ruling may spur the creation of more sophisticated liquid staking protocols.

Institutional investors, previously cautious due to regulatory ambiguity, may now feel more comfortable engaging with liquid staking protocols. This could drive significant capital into blockchain ecosystems, particularly Ethereum and other proof-of-stake (PoS) networks.

The SEC’s progressive stance under Project Crypto positions the U.S. as a more blockchain-friendly jurisdiction, potentially attracting projects and talent that might otherwise migrate to jurisdictions with lighter regulatory frameworks (e.g., Singapore, Switzerland). This could counter the trend of blockchain companies relocating offshore due to regulatory uncertainty.

Liquid staking enhances the utility of staked assets by allowing users to use them in DeFi while still earning staking rewards. This ruling could accelerate the growth of PoS networks, as staking becomes more accessible and appealing. Increased liquidity and participation in staking could stabilize PoS blockchains.

Liquid staking makes participating in PoS networks more attractive by eliminating the lock-up periods that deter users. With regulatory barriers lowered, more users can stake assets like ETH, ADA, or SOL while using receipt tokens in DeFi, driving adoption of PoS chains.

Liquid staking tokens are a key building block for DeFi. With the SEC’s ruling, protocols like Lido, Rocket Pool, and Ankr can scale without fear of securities violations, leading to deeper integration with lending platforms, DEXs, and yield aggregators. This could create a flywheel effect: more staked assets ? more liquid tokens ? greater DeFi liquidity ? higher yields and utility ? increased user participation.

The precedent set by the SEC’s guidance could extend to other tokenized assets, encouraging the tokenization of real-world assets (RWAs) like real estate or bonds on blockchain. If receipt tokens for staked assets are not securities, similar logic might apply to other tokenized representations, unlocking new markets.

Liquid staking tokens can be used across multiple blockchains via bridges and layer-2 solutions. The SEC’s clarity may encourage developers to create cross-chain staking protocols, enhancing interoperability and creating seamless DeFi ecosystems across networks like Ethereum, Polkadot, and Cosmos.

This ruling could revolutionize blockchain by accelerating the growth of PoS networks, expanding DeFi ecosystems, and fostering mainstream financial integration. However, ongoing vigilance is needed to address remaining regulatory nuances, security risks, and infrastructure challenges to fully realize this potential.

The turbulence rocking the global semiconductor market is poised to escalate further as President Donald Trump on Tuesday told CNBC’s Squawk Box that his administration plans to announce a new wave of tariffs on semiconductors and chips “within the next week,” marking a sharp turn in U.S. trade and industrial policy.

The announcement comes on the heels of an ongoing Section 232 investigation launched in April into national security risks posed by U.S. reliance on foreign-made chips — a probe that many experts had warned could set the stage for punitive tariffs.

Though Trump did not provide specific details about the tariff rates or scope, policy insiders anticipate the administration could begin with a 25% levy on imported chips, with the potential to expand the coverage and rate depending on supply chain vulnerabilities and geopolitical concerns. The Wall Street Journal reported that the tariffs could also target pharmaceutical products, but the chip measures appear to be more imminent.

The reaction was swift across financial markets. Shares of chipmakers including Nvidia, Broadcom, and other semiconductor giants tumbled on Tuesday. The Philadelphia Semiconductor Index dropped 1.1%, while the iShares Semiconductor ETF (SOXX) lost 0.7%. Investors are bracing for ripple effects across the U.S. tech sector, particularly for firms heavily reliant on imported hardware components.

The tariff plan comes even as the U.S. attempts to rebuild its semiconductor supply chain under the 2022 CHIPS and Science Act, which earmarked $52 billion in subsidies to bolster domestic chip production. At the time the law was signed, the U.S. produced only around 10% of the world’s chips, despite being home to more than half of the leading semiconductor design firms.

Major players like Intel and Taiwan Semiconductor Manufacturing Company (TSMC) have already received support under the program. TSMC has committed to investing at least $100 billion over four years to build and expand its U.S.-based manufacturing facilities. But establishing chip fabs — massive, clean-room manufacturing plants — is a long, expensive process. Intel’s repeated delays in building its flagship plant in Ohio underscore the difficulty of scaling production quickly, even with government funding.

The U.S. remains far from achieving full supply chain independence, raising concerns that new tariffs could end up hurting domestic industries more than their intended foreign targets, at least in the short term.

Reversal on AI Chip Export Rules Sows Further Confusion

Complicating the picture is the administration’s shifting stance on AI chip export controls. In May, Trump formally rescinded the Biden administration’s rules that placed tiered, country-specific restrictions on the export of advanced semiconductors used in artificial intelligence systems. The Biden-era framework had focused on national security threats, particularly around China’s access to high-performance chips from companies like Nvidia and AMD.

Trump’s administration followed the repeal with the release of a broad AI Action Plan in July, which emphasized the need for stricter export controls. But the document was vague on how such rules would be implemented. And now, according to reporting from Semafor, senior officials within the administration are internally debating whether to go through with their plan to replace the Biden rules or abandon the effort altogether. Sources close to the matter say no final decision has been made.

This policy uncertainty is unsettling to U.S. chipmakers and AI firms, many of which operate in both consumer and defense-adjacent sectors. Without a clear regulatory roadmap, companies are struggling to plan long-term strategies and are voicing growing frustration over the uncertainty.

High Stakes for the U.S. Tech Ecosystem

The combination of looming tariffs and murky export controls is setting the stage for a pivotal period in the U.S. tech industry. On one hand, the administration appears determined to reduce America’s dependence on foreign chips — particularly from Asia — and to secure domestic control over the next generation of computing infrastructure. On the other hand, the tariffs could raise costs for U.S. firms and consumers in the short term, while regulatory unpredictability may hinder innovation and investment.

Despite the billions poured into the CHIPS Act, the U.S. still lacks the capacity to meet domestic chip demand. That gap means tariffs may do more to squeeze American companies than foreign competitors, at least until domestic manufacturing catches up.

If Trump follows through with the tariff announcement as expected next week, the semiconductor sector could face a dramatic shake-up, compounding what has already been a volatile year for chips, AI hardware, and the entire tech supply chain.