The Crypto Council for Innovation is advocating for a re-evaluation of the U.S. Securities and Exchange Commission’s (SEC) stance on staking, arguing that it is not only beneficial to digital asset markets but should also be free from the agency’s regulatory oversight. The coalition, which includes notable players in the staking space such as Kraken, a16z, Lido, Galaxy, Figment, Polychain, and Paradigm, has penned a letter to the SEC’s crypto task force. The letter asserts that the rationale behind the SEC staff’s recent determination that ‘proof-of-work’ mining does not constitute a securities transaction should similarly apply to staking.
The letter states, “Stakers, like PoW miners, are compensated based on protocol-defined outcomes, not managerial actions or profit-sharing arrangements,” emphasizing the operational nature of staking. This practice involves users locking up their cryptocurrencies for a set period to contribute to the functionality and security of a blockchain network, with corresponding rewards as compensation.
According to the CCI, those engaging in staking on ‘proof-of-stake’ protocols are delivering valuable technical services, distinguishing their rewards as active contributions rather than passive investment returns. This perspective diverges from the SEC’s historical viewpoint, particularly under former Chairman Gary Gensler, during which the agency targeted staking operations, exemplified by Kraken’s high-profile settlement surrounding its staking services.
The CCI’s letter urges the SEC to issue clearer guidance akin to what has been provided to memecoin issuers, miners, and select stablecoin issuers, indicating that their activities exist outside the SEC’s regulatory purview. While such statements may not serve as formal guidance, they are intended to clarify the current regulatory landscape.
The coalition highlights that some state-level securities regulators are already pursuing enforcement actions regarding staking, underscoring the need for federal guidance to demonstrate a supportive and innovation-friendly regulatory environment. This aligns with the broader trend toward a more amicable approach toward digital assets, particularly since the initiation of the Trump administration.
New SEC Chairman Paul Atkins recently expressed openness to reconsidering the agency’s treatment of crypto businesses during a crypto roundtable discussion. This comes in light of ongoing efforts by U.S. senators who have also urged the SEC to reassess its opposition to staking, especially in regards to the industry’s spot ETFs.
As discussions continue, the future of staking remains unclear, but the collaborative effort from the crypto community to engage with regulators signifies a critical moment in the evolution of digital asset regulations.
