Fresh US Securities and Exchange Commission (SEC) staff guidance on liquid staking is stoking expectations that US regulators will soon allow staking within spot crypto exchange-traded funds (ETFs).

Co-founder of The ETF Institute Nate Geraci called the guidance “the last hurdle” before the SEC can approve staking in spot Ethereum (ETH) ETFs.

Furthermore, he noted that liquid staking tokens (LSTs) would be used to manage liquidity inside funds, a key concern for the Commission.

His comments echo the SEC Division of Corporation Finance’s view that, under the structures described, liquid staking activities do not involve offers or sales of securities.

Additionally, staking receipt tokens (SRT) function as receipts for the underlying assets rather than as securities themselves.

Industry read-through

LSTs allow funds to keep staked exposure liquid, maintaining on-chain staking rewards while holding a transferable receipt token that can be used for portfolio operations, collateral, or redemptions without fully unwinding staking positions.

Lucas Bruder, CEO of Jito Labs, said in a note that the statement showed an “incredibly nuanced understanding” of current liquid staking arrangements. 

He added:

“We will see expanded use for LSTs in both traditional and novel financial instruments, including ETFs.” 

Regarding the impact of the decision, Bruder is looking forward to fully-staked ETFs via LSTs coming to market.

The CEO of Jito Labs and other industry players met with the SEC in mid-February to discuss staking rules for ETFs. 

According to the meeting logs, LSTs were discussed to address the agency’s concerns about redemption timing. The participants highlighted that LSTs within an ETP framework avoid direct involvement in the staking process, streamlining the process.

The liquid staking statement builds on a May 29 staff view that other forms of protocol staking likewise do not require registration, and that features such as early withdrawals or slashing protection do not by themselves convert staking into a securities offering. 

However, the SEC emphasized that its view applies to administrative and ministerial provider roles and specific fact patterns. Consequently, arrangements that go beyond those boundaries may be treated differently.

Mentioned in this article

The Commodity Futures Trading Commission (CFTC) is revoking an advisory requiring strict review of new virtual asset derivatives – financial instruments that derive their value from an underlying cryptocurrency, allowing investors to speculate on price movements without directly owning the asset.

In a statement, the regulatory agency says that its Division of Market Oversight (DMO) and Division of Clearing and Risk (DCR) decided to withdraw CFTC Staff Advisory No. 18-14 (Advisory with Respect to Virtual Currency Derivative Product Listings) effective immediately.

The DMO and the DCR originally issued the advisory on May 21st, 2018, to provide guidance on enhanced standards for derivative contracts to be listed on a designated contract market (DCM) or swap execution facility (SEF), or to be cleared by a derivatives clearing organization (DCO).

At the time, the DMO and the DCR said that the risks of the crypto markets justify scrutiny by the CFTC staff and registered entities.

“In light of the risks discussed above, staff highlights certain key areas that require particular attention in the context of listing a new virtual currency derivatives contract pursuant to Commission Regulation 40.2 or 40.3. The topics are: (A) enhanced market surveillance; (B) coordination with CFTC staff; (C) large trader reporting; (D) outreach to stakeholders; and (E) DCO risk management.”

On March 27th, the CFTC announced the withdrawal of the advisory. The agency says the guidance reflected the thinking of its staff in 2018 based on experience with crypto derivatives products.

“DMO and DCR determined that the advisory is no longer needed given additional staff experience with virtual currency derivative product listings and increasing market growth and maturity.”

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BNB price has noted significant gains over the past few days, surging past the psychological resistance of $300. The native cryptocurrency of the Binance Exchange has surpassed Solana to regain its position as the fourth-largest cryptocurrency by market cap. The digital currency has been rallying lately with a 7-day profit of more than 15%. Additionally, BNB has clocked a phenomenal gain of 38% in the month to date.

Binance Coin Outlook

BNB price has been on a strong bull run for the past week, breaking out of its consolidation. Even so, the asset has experienced a correction in its uptrend over the past 24 hours but remains above the crucial level of $300. BNB’s total market cap has decreased by 4% over the past day to $48 billion, while the total volume of the asset traded over the same period dipped by about 15%.

Over the past year, Binance Coin has had to cope with Fear, Uncertainty, and Doubt (FUD)  on the back of the regulatory troubles of its underlying exchange. Earlier, the BNB price touched a low of $223.50, a few days after its former CEO, Changpeng Zhao, pleaded guilty to money laundering charges. However, the cryptocurrency has managed to rebound 46% in value since then.

The recent price rally has been associated with various positive developments in the Binance ecosystem, including the Introduction of the Isolated Margin Auto-Transfer Mode. This feature enables users to smoothly execute Isolated Margin orders, utilizing assets from both their Spot and Margin Wallets without the need for manual transfers. As such, the hassle of moving assets before trading is eliminated.

Despite the price increase, analysts remain bearish on the Binance Coin. Data by Santiment shows that BNB’s Funding Rate and the Weighted Sentiment dropped. This suggests that the negative sentiment around the digital asset has not yet faded.

BNB Price Technical Analysis

The daily chart shows that the BNB price has been slowing down for the past two days, after rallying by more than 20% this week. At the time of writing, the BNB price was trading 1.73% lower at $317.3. Its Relative Strength Index (RSI) shows that the asset is in the overbought territory, hence BNB is likely to experience a price reversal.

The altcoin has been struggling to break above the key hurdle at $339, since it was first formed in May 2022. The digital asset has been rejected from this level ten times so far. Due to the nature of the barrier, the BNB price might experience a small pullback at the level. As such, investors need to be prepared for a potential correction to the important level of $300. On the other hand, flipping $339 into a support floor would pave the way for further gains to $400.

BNB Price Chart