An SEC staff FAQ published on September 25 has renewed questions about how holders can exit liquid-staking positions. It distinguishes certain certificates of deposit from tokens issued by protocol-based liquid-staking providers, but does not specifically classify Coinbase’s cbETH or Lido’s stETH. Transferability does not guarantee an immediate conversion into unstaked ETH or a sale near the value of the underlying assets.
At the time of publication, Ethereum (ETH) was trading at $2,690.39, down 0.04% over 24 hours but up 3.10% over 30 days and 8.42% over 90 days. For holders assessing exit risk, the token’s market price, redemption process and potential wait remain separate considerations.
SEC distinguishes deposit certificates from protocol tokens
The SEC Division of Corporation Finance’s description of a “staking receipt” focuses on the rights it represents, rather than the token’s name. The receipt should show that an asset has been deposited while the depositor retains ownership. Under the conditions outlined in the FAQ, the issuer should not take control of the deposited asset or transfer, lend, stake, restake or otherwise use it. The asset should also be protected from claims by the issuer’s third-party creditors.
That description applies to a specific type of receipt discussed by SEC staff; it does not establish a new custody rule for all liquid-staking tokens. Under the SEC’s March 2026 crypto-asset interpretation, a receipt whose primary function is to evidence ownership could be treated as a “digital tool” if the underlying digital commodity is not subject to an investment contract. By contrast, a token issued by a protocol-based liquid-staking provider could be considered a “digital commodity” if its value is tied to a functioning crypto system and shaped by market supply and demand.
The word “could” matters. Calling a token a staking token does not determine its regulatory status. The staff FAQ makes no specific finding about cbETH or stETH, and staff views are nonbinding; they do not create new legal obligations.
A separate August 2025 staff statement from the SEC’s Division of Corporation Finance discussed transferable liquid-staking tokens representing deposited assets and accrued rewards. It also addressed smart-contract protocols and third-party custody. The statement did not cover restaking or arrangements in which a provider controls staking choices, sets or guarantees rewards, or helps generate additional token returns. Falling outside the statement’s scope does not itself mean the SEC has determined that an arrangement involves securities.
cbETH holders must unwrap before unstaking
Coinbase’s US user agreement says cbETH represents ETH staked through Coinbase and the associated rewards, less fees and slashing losses. Coinbase holds the staked ETH and rewards on token holders’ behalf, according to the agreement, without taking ownership. If a holder sells or transfers cbETH, the underlying interest and related contractual redemption rights pass to the recipient.
Holders can therefore seek an exit by selling cbETH on the secondary market before the underlying ETH has completed unstaking. Coinbase’s product materials say cbETH can be sold, transferred or held in an external wallet. But a sale is a market transaction: its price can diverge from the value of ETH or staked ETH. Coinbase does not guarantee a buyer will be available at any given time or provide a liquidity backstop for cbETH.
Contractual redemption is a separate route. To unwrap cbETH in a Coinbase account, eligible holders must have an account in good standing and meet the relevant staking requirements. Regional restrictions and processing delays may also apply. Unwrapping returns ETH that is still staked, less applicable fees and slashing losses—not immediately available, unstaked ETH. Holders must then submit a separate unstaking request and wait for the Ethereum network’s process to complete.
As a result, the ability to transfer cbETH does not mean every holder can redeem ETH immediately or on the same terms. The practical exit timeline depends on account eligibility, location, Coinbase’s processing and Ethereum’s unstaking process.
stETH withdrawals depend on Lido’s queue
Lido operates differently. Under its contract documentation, users deposit ETH into the protocol’s smart contracts and receive stETH. To reclaim ETH through the protocol, holders submit a withdrawal request, which enters a queue. Alternatively, they can sell stETH to another trader and avoid the protocol withdrawal process.
For protocol withdrawals, queue capacity and the speed at which Ethereum validators exit can affect waiting times. Lido’s risk disclosures say the ETH ultimately received is calculated under the protocol’s accounting mechanism and may be affected by adverse events, including validator slashing. A direct sale of stETH can be faster, but only if a buyer is available at an acceptable price. When liquidity is tight, bid-ask spreads, slippage and discounts to ETH may widen.
Lido also discloses smart-contract, governance and validator risks. Its documents state that stETH and wstETH do not have generally applicable protocol-level regulatory approval. In practice, stETH’s “liquidity” means it can be transferred and traded; it is not a guarantee of redemption for ETH at any time or price.
SEC guidance does not replace product terms
Both cbETH and stETH can be transferred before the underlying staked ETH has been withdrawn, but their custody arrangements and redemption routes differ. cbETH holders must meet Coinbase’s terms and eligibility requirements to unwrap, then submit an unstaking request. stETH holders face Lido’s withdrawal queue and validator exit process, or can seek a buyer in the secondary market.
Under either route, the token may trade at a different price from the value of the underlying staked position. A market sale depends on available buyers, spreads and slippage; protocol redemption can be affected by queues, network processing and asset losses. The SEC’s September 25 FAQ addresses how certain arrangements might be classified under securities law. It does not confirm that any token can be converted into unstaked ETH on demand.
Holders assessing whether a liquid-staking token fits their exit needs still need to check who holds the deposited assets, who handles redemption, what asset is returned at the first step, and how queues, eligibility limits, slashing and market discounts could affect the outcome.