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SEC Clarifies: Most Proof-of-Stake Staking Activities Not Classified as Securities

Washington, D.C., May 29, 2025 — In a significant development for the cryptocurrency industry, the U.S. Securities and Exchange Commission (SEC) has clarified that certain staking activities on proof-of-stake (PoS) blockchain networks do not constitute securities transactions under federal law. This guidance, issued by the SEC's Division of Corporation Finance, provides much-needed clarity for participants in PoS networks, particularly those involved in staking services.

Source: SEC

Understanding the SEC's Guidance

The SEC's statement addresses three primary forms of staking:

1. Self-Staking: Individuals who operate their own nodes and stake their own crypto assets.

2. Self-Custodial Staking via Third Parties: Asset owners who delegate staking responsibilities to third-party node operators while retaining control over their assets.

3. Custodial Staking Services: Third-party custodians who stake assets on behalf of clients, maintaining control over the staked assets during the process.

In all three scenarios, the SEC concluded that these activities do not involve the offer or sale of securities and, therefore, are not subject to registration requirements under the Securities Act. The Commission emphasized that staking rewards are compensation for services rendered to the blockchain network, rather than profits derived from the efforts of others—a key distinction in securities law.

Implications for the Crypto Industry

This clarification is a welcome development for the crypto industry, which has long grappled with regulatory uncertainty surrounding staking activities. Major platforms like Coinbase, Kraken, and Lido, which collectively manage billions in staked assets, now have clearer guidelines to operate within. The guidance also removes a significant barrier to institutional adoption of staking services, as concerns over potential enforcement actions and compliance costs have been alleviated.

Alison Mangiero, head of staking policy at the Crypto Council for Innovation, hailed the SEC's statement as a "major step forward" for the U.S. cryptocurrency industry. "The SEC has now recognized what we've long argued: Staking is a core part of how modern blockchains operate, not an investment contract," she stated.

Diverging Opinions Within the SEC

While the guidance has been positively received by many in the industry, it has also sparked debate within the SEC itself. Commissioner Hester Peirce expressed support for the clarification, noting that regulatory uncertainty had previously discouraged participation in network consensus and undermined the decentralization of PoS blockchains.

Conversely, Commissioner Caroline Crenshaw raised concerns about the guidance, arguing that it overlooks existing legal precedents where staking services were deemed securities. She emphasized the importance of adhering to the Howey Test, the legal standard for determining whether a transaction qualifies as an investment contract. Crenshaw cautioned that the new guidance might conflict with prior court decisions and could potentially expose investors to risks without adequate protections.

Limitations and Future Considerations

It's important to note that the SEC's guidance does not encompass all forms of staking. More complex models, such as liquid staking and restaking, remain unaddressed. Additionally, the guidance is a staff statement and does not carry the weight of law, meaning it could be subject to change or reinterpretation in the future.

The crypto community continues to advocate for comprehensive and transparent regulations to support innovation while ensuring investor protection. Stuart Alderoty, Chief Legal Officer at Ripple, recently called for clearer rules, asserting that most tokens traded on exchanges should not be classified as securities. He warned that the U.S. risks falling behind in cryptocurrency innovation due to regulatory ambiguity.

Conclusion

The SEC's recent guidance marks a pivotal moment for the cryptocurrency industry, providing clarity on the regulatory treatment of certain staking activities. While the statement offers reassurance for participants in PoS networks, it also underscores the need for ongoing dialogue and the development of a comprehensive regulatory framework that balances innovation with investor protection.

Writer @Erlin

Erlin is an experienced crypto writer who loves to explore the intersection of blockchain technology and financial markets. She regularly provides insights into the latest trends and innovations in the digital currency space.

 

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