Staking on Proof-of-Stake Blockchains Doesn’t Break Securities Laws, SEC Staff Clarify

US SEC Says Common Crypto Staking Practices Are Not Securities

The US Securities and Exchange Commission’s (SEC) stance has brought clarity to the murky waters of crypto staking.

In a new staff statement, the SEC’s Division of Corporation Finance said that many of the most common staking activities in proof-of-stake (PoS) blockchain networks do not qualify as securities under federal law.

What Is Protocol Staking And Why It’s Not a Security

According to the SEC’s internal staff view, staking cryptocurrency to support blockchain operations — known as “Protocol Staking Activities” — does not amount to a securities transaction.

The staff clarified that these activities do not require registration under the Securities Act, nor do they fall under any of the Act’s exemptions.

The rationale hinges on the idea that staking rewards are compensation for services provided by node operators, such as validating transactions, rather than profits driven by another party’s managerial efforts.

In the eyes of SEC staff, this distinction removes protocol staking from the scope of securities law.

Staking Services Like Slashing And Early Withdrawal Not Regulated

Beyond protocol staking, the statement addressed associated services, noting that features like slashing protection, early unbonding, and alternative reward structures are considered "administrative or ministerial in nature" and not indicative of a securities offering.

These services, often bundled with staking, do not fundamentally change the regulatory profile of the activity.

Custodial staking, where assets are staked by third parties such as exchanges or custodians on behalf of users, also doesn’t meet the securities threshold.

According to the staff, custodians act as agents without making key decisions about the amount staked, reaffirming their role as facilitators rather than promoters.

Exclusions Apply Only To Covered Crypto Assets

The guidance is specific to “covered crypto assets” used on PoS networks.

This includes assets involved in self-staking, third-party non-custodial arrangements, and custodial staking services.

The SEC clarified that only certain protocol staking activities covered in its statement are not considered securities offerings. (Source: sec.gov)

However, the SEC did not define which assets are “covered,” nor did it provide clarity on newer models such as liquid staking or restaking.

Importantly, the statement notes it holds no legal force or effect, indicating that while it reflects the current views of SEC staff, it does not constitute binding regulatory guidance.

Industry Cheers As Regulatory Fog Begins To Lift

The statement was met with cautious optimism by many in the crypto sector.

SEC Commissioner Hester Peirce, a key advocate for clearer digital asset regulation, welcomed the update.

“Uncertainty about regulatory views on staking discouraged Americans from doing so for fear of violating the securities laws.”

She added,

“This artificially constrained participation in network consensus and undermined the decentralization, censorship resistance, and credible neutrality of proof-of-stake blockchains.”

Hester Peirce, widely known as "Crypto Mom," is a U.S. SEC Commissioner distinguished by her advocacy for pro-innovation crypto regulation, including a "safe harbor" proposal for token projects, and her criticism of the SEC's enforcement-heavy approach.

Peirce also highlighted,

“Today’s statement provides welcome clarity for stakers and “staking-as-a-service” providers in the United States.”

Rebecca Rettig, Chief Legal Officer at Jito Labs, posted on X that the decision may open the door for crypto exchange-traded funds (ETFs) to incorporate staking into their products, signalling new financial innovation could follow.

Critics Argue The Guidance Falls Short Of Legal Standards

However, not all voices were in agreement.

SEC Commissioner Caroline Crenshaw, the Commission’s lone Democrat, issued a strong rebuke.

She argued that the staff’s interpretation does not align with court rulings or the established Howey Test, which assesses whether an arrangement qualifies as an investment contract.

Caroline Crenshaw is a U.S. SEC Commissioner who has often expressed skepticism about the crypto market, characterizing it as a "petri dish of fraudulent conduct" and frequently dissenting on decisions that she believes undermine investor protection within the digital asset space.

Crenshaw strongly criticized the approach, stating,

“This is yet another example of the SEC’s ongoing “fake it ‘till we make it” approach to crypto – taking action based on anticipation of future changes while ignoring existing law.”

She further remarked,

“This statement fails to deliver a reliable roadmap for determining whether a staking service may be an investment contract.”

Pressure From The Industry Accelerates SEC’s Move

The announcement follows sustained pressure from the crypto community.

In April, over 30 digital asset firms, led by the Crypto Council for Innovation, formally urged the SEC to clarify its position.

The letter emphasised that staking should be recognised as a “technical process” rather than an investment activity, warning that regulatory overreach could freeze market development and hinder innovation in blockchain infrastructure.

Shifting Tone Post-Gensler

The SEC’s current tone appears to be a departure from the agency’s more aggressive posture under former Chair Gary Gensler.

During his tenure, the Commission targeted staking offerings from Kraken, Coinbase, and MetaMask.

More recently, the SEC clarified in March 2025 that proof-of-work mining also falls outside securities regulation, suggesting a broader recalibration of its crypto oversight strategy.

While the latest statement stops short of establishing formal rules, it offers a clearer, if non-binding, framework for market participants navigating the complexities of staking in the US.

The guidance may also serve as a precursor to more definitive regulation in the future.