The US Securities and Exchange Commission (SEC) finally gave some much-needed clarity on cryptocurrency staking. They’ve said that most staking activities are not securities transactions under US law.
What the SEC Said About Staking
The SEC’s Division of Corporation Finance released a statement saying that a lot of staking on Proof-of-Stake (PoS) networks isn’t subject to securities laws. This includes:
- Self-staking: Staking your own coins.
- Staking with a third-party validator: Using a validator but still managing your own keys.
- Custodial staking: Letting a platform stake your coins for you.
The SEC’s reasoning is that these types of staking are integral to how the blockchain network functions, and don’t meet the criteria of an investment contract (according to the Howey Test).
This is good news for ETF providers who want to offer staking services, as it suggests that these services are generally okay.
Not All Staking is Created Equal
However, the SEC’s statement doesn’t cover everything. Things like “liquid staking,” “restaking,” and “liquid restaking” weren’t addressed. So, there’s still some uncertainty in those areas.
Reactions to the News
SEC Commissioner Hester Peirce welcomed the clarity, saying the previous uncertainty discouraged Americans from staking. She argued that unclear rules hurt the decentralization and security of PoS blockchains.
On the other hand, Commissioner Caroline Crenshaw disagreed, saying the SEC’s interpretation ignores existing laws and court decisions. She criticized the approach as a “fake it ’til you make it” strategy.
The Road to Clarity
This new guidance comes after a group of industry players and advocacy groups asked the SEC for clearer rules on staking. They argued that existing regulations weren’t suitable for staking, which is more technical than financial. The SEC’s response is a step towards a more defined regulatory landscape for the crypto industry, but it’s certainly not the end of the story.
