Securities Commission Approves Crypto Staking as Non-Securities undertaking in Pioneering Directive
On May 29, the U.S. Securities and Exchange Commission's (SEC) Division of Corporation Finance issued a statement clarifying its regulatory stance on staking activities in proof-of-stake (PoS) networks.
The Division concluded that certain protocol staking activities, where users stake their own crypto assets on PoS or delegated PoS networks, do not constitute the offer or sale of securities under federal securities laws. Consequently, transactions related to these activities do not require registration.
Three primary types of staking arrangements were addressed: self (solo) staking, self-custodial staking with third parties, and custodial arrangements. The Division applied the Howey test and determined that protocol staking fails to meet the criteria for an investment contract, mainly due to rewards coming from network activities rather than entrepreneurial efforts.
According to the Division, there is no common enterprise based on others' efforts or reliance on their success in staking activities. Instead, participants earn rewards through their own protocol compliance. Furthermore, the Division views staking activities as service provision rather than investment in a profit-generating enterprise.
CoinFund President Christopher Perkins and ETF Store President Nate Geraci praised the SEC's stance, with Geraci stating that it clears another hurdle for staking in spot Ether Exchange-Traded Funds (ETFs).
In related news, US lawmakers introduced the Digital Asset Market Clarity Act of 2025 on May 29. This bipartisan regulatory framework aims to define the roles of the SEC and the Commodity Futures Trading Commission (CFTC) in crypto regulations, providing clarity on which agency will oversee crypto assets.
House Committee on Financial Services Chairman French Hill and bill sponsor Dusty Johnson highlighted the bill's importance for consumer protection, American innovation, and establishing the United States as the global leader in the digital assets marketplace.
- The clarification by the SEC's Division of Corporation Finance on staking activities in proof-of-stake networks suggests that transactions related to these activities do not require registration, due to protocol staking failing to meet the criteria for an investment contract.
- The Division's conclusion states that rewards in protocol staking come from network activities rather than entrepreneurial efforts, and there is no common enterprise based on others' efforts or reliance on their success in staking activities.
- In the context of crypto finance and technology, the Division views staking activities as service provision rather than investment in a profit-generating enterprise, which could have implications for the future of crypto trading and investing.
- Coinciding with the SEC's regulatory stance on staking, US lawmakers have introduced the Digital Asset Market Clarity Act of 2025, aiming to provide clarity on the roles of the SEC and the Commodity Futures Trading Commission in crypto regulations, potentially shifting the landscape of crypto regulation and market structure.
