Crypto Industry Calls for Clarity on Staking
The crypto industry is pushing for clear regulatory guidance from the Securities and Exchange Commission (SEC) on crypto staking and staking services. A coalition of nearly 30 crypto advocate groups, led by the Crypto Council for Innovation (CCI), has requested the SEC’s Crypto Task Force provide specific rules for this increasingly important sector.
The CCI’s Proof of Stake Alliance (POSA) group, in a letter addressed to SEC Commissioner Hester Peirce, argued that staking is fundamentally a technical process, not an investment activity. They emphasized that staking is essential to the decentralized internet, stating, “Staking isn’t niche — it’s the backbone of the decentralized internet.”
The letter was a direct response to the SEC’s call for public input on whether staking and liquid staking should be regulated under federal securities laws. The coalition advocated for responsible inclusion of staking features in exchange-traded products (ETPs) and cautioned against overly restrictive rules that could stifle innovation.
Arguments Against Securities Regulation
The group argued that staking, unlike a traditional investment, does not meet the Howey test definition of an “investment contract.” Stakers retain ownership of their assets, and rewards are determined by blockchain protocols, not the staking provider’s actions. This means the provider isn’t generating profits through managerial decisions as a company would.
The letter further requested that the SEC adopt a principles-based approach similar to the recent staff statements on proof-of-work mining. They highlighted the recent progress in dialogue with the SEC, stating, “In the past 4 months, we’ve seen more movement and constructive dialogue with the SEC than in the past 4 years.” This collaboration has prompted the industry to propose concrete principles for guidance.
High-Profile Supporters
The Proof of Stake Alliance includes prominent crypto organizations and companies, such as Andreessen Horowitz (a16z), Consensys, and Kraken, which resumed staking services in the US earlier this year. This coalition’s strong support for clear staking regulations highlights the growing importance of this technology within the crypto ecosystem.
The SEC’s decision on staking could have significant implications for the crypto industry. The agency has yet to approve a crypto staking exchange-traded fund (ETF) and delayed the decision on allowing staking for Grayscale‘s spot Ether ETF in April. Analyst James Seyffart predicted that an Ether ETF that includes staking could be approved as early as May, but this remains uncertain.
The crypto industry’s call for clarity on staking underscores the ongoing need for regulatory certainty in this rapidly evolving space. As the sector matures, clear and concise rules are essential for fostering innovation and driving broader adoption.
