The SEC's Division of Corporation Finance drew a conditional line on Sept. 25 between staking receipts and protocol-issued tokens, without naming Coinbase's cbETH or Lido's stETH. Neither product guarantees a holder immediate access to unstaked ETH — Coinbase requires a separate unstaking step after unwrapping, and Lido routes withdrawals through a protocol queue.
An ETH holder can sell a liquid-staking token while the ETH behind it stays staked. That gap sits at the center of a Sept. 25 SEC staff FAQ, which draws a conditional distinction between receipts that evidence ownership and protocol-issued tokens without naming either Coinbase's cbETH or Lido's stETH.
What the SEC staff actually said
The Securities and Exchange Commission's Division of Corporation Finance said a qualifying staking receipt for a digital commodity may be classified as a digital tool, while a token issued by a protocol-based liquid-staking provider may instead be classified as a digital commodity. The staff does not classify either token by name; their terms determine who holds the deposited ETH, how the token can be redeemed, and what happens if the holder sells instead.
A receipt evidences that an asset was deposited and that the depositor retains ownership. Under the FAQ's description, ownership and control do not pass to the receipt issuer, which cannot transfer, lend, pledge, rehypothecate, or otherwise use the deposited asset. A receipt issued by a protocol-based liquid-staking provider may itself be a digital commodity when its value is linked to a functioning crypto system and market supply and demand.
Coinbase's custodial path
Coinbase's US user agreement says cbETH represents ETH staked through Coinbase, including accrued rewards and subtracting fees or slashing penalties, and that the staked ETH is held by Coinbase on behalf of token holders without ownership transferring to Coinbase. Selling or transferring cbETH transfers the underlying ownership interest and the contractual redemption right to the recipient.
That transferability gives a holder a way to seek an exit before the staked ETH is withdrawn, and Coinbase's product guidance says cbETH can be sold, sent, or held in an external wallet. But selling it is a market transaction, and Coinbase warns in its agreement that the token's price can diverge from ETH or staked ETH; it does not promise a buyer will be available.
An eligible cbETH holder must have a Coinbase account in good standing and meet staking eligibility requirements to unwrap. Unwrapping returns staked ETH, not immediately spendable unstaked ETH — obtaining ETH after that requires a further unstaking request and completion of Ethereum's process.
Lido's protocol queue
Lido's contract documentation describes a different model: a user deposits ETH into the protocol's smart contract and receives stETH, then submits a withdrawal request that enters a queue to reclaim ETH, or sells the token to another trader instead. Lido's risk disclosure says a protocol withdrawal can be slowed by queue capacity and Ethereum validator exits, and the ETH ultimately received follows the protocol's accounting and can be affected by adverse events such as slashing.
A secondary-market sale is faster only if a buyer will trade at an acceptable price, and spreads, slippage, and a discount to ETH can widen when liquidity is strained. The disclosure also says stETH and wstETH have no general, protocol-level regulatory approval.
A label does not settle the exit
The two products show that "liquid" describes a token's ability to move, not a guaranteed conversion into unstaked ETH at a fixed value. With cbETH, the holder depends on Coinbase's custody terms and eligibility process for contractual unwrapping, or on a market buyer for a sale. With stETH, the holder can use a protocol withdrawal queue or a market buyer — and in either case, the secondary-market price can differ from the value of the underlying staked position.
The Sept. 25 FAQ's answers are nonbinding staff views that create no new obligations. Before treating a liquid-staking token as interchangeable with ETH, a holder needs to know who retains ownership of the deposit, who operates the redemption path, what asset comes back first, and which delays or losses can intervene.
Source: CryptoSlate
Trading involves risk.
Risk Disclaimer
