The U.S. Securities and Exchange Commission (SEC) has provided crucial clarification regarding cryptocurrency staking, confirming that protocol staking activities on proof-of-stake (PoS) networks do not constitute securities offerings under federal securities laws, provided that certain conditions are met.
The SEC's Division of Corporation Finance issued guidance emphasizing that staking cryptocurrencies intrinsically linked to the operation of public, permissionless networks—participating in consensus mechanisms for transaction verification—does not involve the offer or sale of securities as defined by the Securities Act of 1933 and the Securities Exchange Act of 1934.
The clarification covers key types of staking such as self-staking (staking one's own assets), self-custodial staking (delegating staking while retaining ownership), and custodial staking (custodians staking assets on behalf of customers). However, the guidance excludes practices like liquid staking and restaking where staking decisions are controlled by third parties, which may still be subject to securities laws.
This announcement represents a significant shift from previous regulatory ambiguity under former SEC Chair Gary Gensler and his administration, which broadly categorized many crypto tokens as securities, creating uncertainty and compliance risks.
Commissioner Caroline Crenshaw expressed dissent in one statement, arguing that exempting staking activities from securities laws contradicts legal precedent and could sow further regulatory uncertainty.
The SEC guidance positively impacts major PoS networks such as Ethereum (ETH), Cardano (ADA), and Solana (SOL) by reducing compliance risks and encouraging greater participation from retail and institutional investors in staking activities. Staking rewards are now recognized as compensation for performing node services rather than investment returns derived from others’ efforts, which supports a non-security classification.
This regulatory clarity is expected to enhance market confidence, potentially increasing staking engagement and innovation in the decentralized finance (DeFi) ecosystem while delineating compliance responsibilities more clearly.