Crypto companies have been pushing the Securities and Exchange Commission to clarify staking and keep it outside the agency’s regulatory purview.
The Crypto Council for Innovation (CCI), an advocacy group for more crypto-friendly regulation, has already sent a letter asking the commission to deem staking a tech process rather than a securities transaction.
The CCI is seeking for the SEC to issue clarity on staking as it did for meme coin issuers
The CCI cited an SEC staff’s recent statement on “proof-of-work” crypto mining in their letter. According to the group, the staff had previously claimed that proof-of-work crypto mining is not a securities deal under the commission’s authority.
The CCI now believes that the same principle should be applied to staking, keeping it out of the agency’s jurisdiction. They added that staking is not necessarily an investment activity; therefore, there’s no risk of financial losses. However, there’s the risk of slashing where a staker acts outside the protocol’s core rules, but they claimed it rarely occurs.
Nonetheless, what’s most important to the CCI now is for the commission to guide how they view staking and whether it falls under their jurisdiction. The group insisted that the commission could declare as it has done in the past for meme coin issuers, the miners, and some stablecoin issuers if staking is under their authority or supervision. While such statements are tentative, they can create a picture of the regulator’s current position.
The group commented, “Domestically, some state security regulators are filing enforcement actions involving staking. Some guidance from the commission may contribute to sending a clear sign that “at least at a federal level, the U.S. is going to have sensible regulation that is supportive of innovation and in the spirit of the constraints of the securities laws.”
The CCI isn’t the only organization worried about the SEC’s position on staking. In February, some US senators wrote a letter to the regulator asking it to permit staking in crypto spot ETFs.
The SEC sued Kraken and Metamask for the illegal sale of securities in 2024, affecting their staking services
The SEC has loosened its stranglehold on crypto firms, adopting a much friendlier approach since President Trump has been in office. However, earlier, during Gary Gensler’s watch, the SEC ordered some crypto platforms to stop staking due to “violations.”
In March 2024, the crypto exchange Kraken had to stop crypto staking for its U.S. customers and pay $30 million to settle the commission’s charges of providing unregistered securities. Its registered firms, Payward Ventures, Inc. and Payward Trading Ltd., had to stop allowing staking for the first time since 2019.
The SEC had accused Kraken of promoting its staking investment program as an easy-to-use platform, adding that users only benefited because of the exchange’s efforts and not because of how the blockchain works.
Later that year, in July, the regulator also sued Ethereum service provider Consensys over its MetaMask illegal sale of securities. The SEC’s lawsuit extended to staking services Lido (LDO) and Rocket Pool (RPL), the third-party platforms MetaMask used to power its staking feature. The commission claimed that Lido and Rocket Pool are classified as “investment contracts,” meaning that their liquid staking tokens fall under unregistered securities.
Cryptopolitan Academy: Want to grow your money in 2025? Learn how to do it with DeFi in our upcoming webclass. Save Your Spot
