The recent guidance issued by the US Securities and Exchange Commission (SEC) regarding crypto staking has brought clarity to the regulatory landscape surrounding this popular activity. The SEC’s Division of Corporation Finance has confirmed that common forms of crypto staking, including self-staking, delegated staking, custodial, and non-custodial forms, do not fall under securities laws. This means that participants in staking activities are not required to register these actions with the financial regulator.
According to the SEC, providing features such as early withdrawal options, bundled rewards, slashing protection, or asset aggregation to meet minimum staking thresholds does not automatically classify these arrangements as securities offerings. The agency emphasized that such enhancements do not change the fundamental nature of staking under federal law.
Staking is essential to blockchain networks running a proof-of-stake (PoS) consensus mechanism, where participants lock up their tokens to validate network transactions and earn rewards. The SEC’s clarification on staking activities is seen as a positive development for the crypto industry.
SEC Commissioner Hester Peirce, a vocal advocate for clearer crypto regulation, supported the decision, highlighting the importance of staking in proof-of-stake systems. She emphasized that regulatory uncertainty has hindered American users from participating in these networks, despite their significance to blockchain infrastructure.
However, not all SEC commissioners share the same view. Commissioner Caroline Crenshaw criticized the staff’s interpretation, arguing that it deviates from legal precedent and overlooks the Howey Test, a key legal standard used to identify securities.
The SEC’s guidance on staking could have significant implications for spot Ethereum exchange-traded funds (ETFs), which are currently unable to stake their assets. This clarification removes a major regulatory obstacle for funds seeking to stake Ethereum or other proof-of-stake assets. Nate Geraci, president of the ETF Store, highlighted the need for further clarity from the Internal Revenue Service (IRS) on how staking rewards will be treated within ETF structures.
If staking integration into ETFs proceeds smoothly, it could open up a new revenue stream for investors and enhance the appeal of crypto investment products in regulated markets. Ethereum ETFs have been gaining traction, with nine consecutive days of inflows totaling over $480 million.
Overall, the SEC’s guidance on crypto staking provides much-needed clarity for participants in the industry and could pave the way for further innovation and growth in the crypto space.