SEC Affirms That Crypto Staking Is Not a Breach of Securities Regulations

Crypto staking may not fall under U.S. securities regulations, according to a statement released by the U.S. Securities and Exchange Commission’s Division of Corporation Finance.

This latest staff announcement clarifies how the SEC intends to assess proof-of-stake networks, emphasizing that the activities in question do not involve the offer or sale of securities. Therefore, participants in these staking activities are unlikely to face legal actions from the agency.

The SEC indicated that various roles—such as node operators, validators, custodians, and others involved in staking, whether independently or through third parties—are included in this clarification. This implies a parallel treatment of staking and mining operations, which the SEC had previously deemed unrelated to securities laws in a prior statement.

Lorien Gabel, CEO of a crypto firm focused on staking, remarked that the SEC’s guidance is a significant simplification of a complex topic, providing reassurance that certain actions previously viewed with caution by companies are now acceptable.

In the staff statement, the SEC acknowledged ancillary activities related to staking, such as insurance and altered unbonding periods, asserting that these do not classify providers as asset managers.

He indicated that companies aiming to offer such services, including pooled staking, have a clearer path to do so thanks to this announcement.

Alison Mangiero, leader of staking policy at the Crypto Council for Innovation, described the statement as a noteworthy step forward, reiterating that stakers will be met with similar legal treatment as miners.

She highlighted the timing of this announcement, which coincides with the SEC’s impending deadline for various applications regarding spot ether exchange-traded funds.

While it seems probable that ETF providers would have received approvals for staking regardless, this statement may streamline their approval process.

Similar to the SEC’s previous communications, the recent statement included a footnote that notes its narrow scope and highlights that it doesn’t carry official rule-making authority or legal weight.

One of the footnotes clarified that the statement only pertains to specific activities involving certain crypto assets that lack inherent economic properties or rights, including those related to passive earnings or future profits.