Crypto Council for Innovation calls on SEC to clarify staking rules
A coalition of 30 crypto advocacy groups, led by the Crypto Council for Innovation, has urged the Securities and Exchange Commission to clarify regulations on staking and staking services.
In response to the SEC’s recent call for public input on whether staking and liquid staking should fall under federal securities laws, the coalition submitted a joint letter outlining why they believe staking should not be treated as a securities activity.
The letter, addressed to SEC Commissioner Hester Peirce, comes amid growing calls from the crypto industry for regulatory clarity around core blockchain infrastructure.
The group, coordinated through the Council’s Proof of Stake Alliance, which counts Coinbase, the Ethereum Foundation, ConsenSys, and the Blockchain Association among its members, argued that staking is a “technical process†that helps secure proof-of-stake networks, not an investment arrangement.
Backing their position, the coalition said staking fails to meet the legal definition of an “investment contract†under the Howey test, the key framework the SEC uses to determine whether something qualifies as a security.
They argued that stakers do not invest money with an expectation of profit derived from the efforts of others. Instead, users retain full ownership of their tokens, which they can withdraw at any time, and any rewards are determined automatically by the blockchain protocol.
Furthermore, the letter emphasized that staking providers are not responsible for generating profits, unlike traditional businesses that rely on managerial decisions to generate returns. Instead, staking services act as intermediaries, connecting users to blockchain networks where rewards are determined automatically by the protocol.
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The coalition called on the SEC to issue principles-based guidance for staking and staking services, similar to the agency’s past statements on proof-of-work mining.Â
Rather than implementing traditional securities laws, the group urged the regulator to recognise staking as a technical function and adopt a framework that supports its responsible use, including in products like exchange-traded funds.
They also proposed a set of practical standards for staking providers, such as transparent disclosures around fees and slashing risks, public audits of smart contract code, clear user consent procedures, and the use of accurate, non-promotional language.
“By providing clear, principles-based guidance, the SEC would ensure that the U.S. remains competitive in the rapidly growing digital asset market,†the group said, adding that other jurisdictions like the U.K., Canada, and Hong Kong have already taken steps to clarify their approach to staking.
They warned that without similar clarity in the U.S., innovation could shift overseas, leaving American companies and users at a disadvantage.
​The letter comes as several ETF issuers, including Fidelity, Franklin Templeton, VanEck, and Grayscale, have filed to include staking in their proposed spot crypto ETFs. However, the SEC has yet to approve any such proposals and has recently delayed decisions on several of these filings.
Nevertheless, analysts remain hopeful that approvals are on the horizon. Bloomberg’s Eric Balchunas and James Seyffart have projected 75% to 90% chances of approval for many pending crypto ETFs by the end of 2025.
Read more:Kraken re-instates crypto staking after $30m SEC settlement
2025-05-01 14:28:02
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