- The U.S. Securities and Exchange Commission (SEC) clarified that most staking services are not securities.
- The decision brings regulatory certainty for firms like Coinbase, Kraken, and Lido.
- This removes regulatory barriers and may encourage more institutional adoption of crypto staking.
- The SEC’s guidance excludes liquid staking, re-staking, and related variations from the clarification.
- Internal disagreement exists within the SEC, with one commissioner voicing strong opposition.
The U.S. Securities and Exchange Commission (SEC) stated on May 29 that most cryptocurrency staking services do not count as securities, ending ongoing uncertainty in the digital asset industry. The new guidance is expected to impact major staking providers like Coinbase, Kraken, and Lido, which oversee billions of dollars in staked digital assets.
Previously, the lack of regulatory clarity left staking service companies at risk of enforcement actions and facing costly compliance requirements designed for traditional securities. Yesterday’s announcement eased these concerns, improving the business environment for firms serving U.S. customers in crypto staking.
Staking lets users lock cryptocurrency tokens to help operate blockchains and, in return, earn rewards. The SEC described that running one’s own staking node—where users manage their own crypto and participate directly—is generally straightforward and not disputed.
Staking-as-a-service has grown in popularity, especially for platforms like Ethereum that require a minimum stake of 32 ETH (valued at over $80,000 U.S.). Many individuals and institutions use third-party providers due to high minimums and technical requirements.
The SEC used the Howey Test to assess whether staking services involve "investment contracts"—the key point in determining if something is a security under U.S. law. Based on this test, the SEC found that staking service providers mainly perform administrative tasks and do not control the rate of return for investors, even when charging service fees. This approach applies whether investors keep their crypto in personal wallets or allow providers to hold the tokens.
However, this guidance does not extend to liquid staking, which issues a secondary token to users while their main crypto remains locked, or to practices like re-staking and liquid re-staking.
Not all SEC members agree on this stance. Commissioner Caroline Crenshaw disagreed strongly and stated that these views reflect staff opinions, not legally binding rules. She argued, “the Division of Corporate Finance was channeling the adage ‘fake it ’till you make it.’” Crenshaw maintained that the legal reasoning is weak, though she recognized that some basic staking setups might avoid investment contract status.
In recent years, the SEC released several staff notes on digital assets, including previous clarifications that solo and pooled mining for proof-of-work blockchains does not create securities. These publications clarify how the SEC may approach future enforcement, though they lack the force of law.
New proposed legislation, the CLARITY Act, does not specifically address staking but offers more legal protections for blockchain-linked tokens meeting certain criteria. This could make future guidance less vulnerable to political shifts.
For more details, readers can review the SEC clarification.
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