Crypto Alliance Informs SEC That Staking Is a ‘Vital Benefit,’ Not a Security

The Crypto Council for Innovation is advocating to the U.S. Securities and Exchange Commission that staking is beneficial for digital asset markets and should not be interfered with by the regulatory body.

This coalition, which includes major stakeholders such as Kraken, a16z, Lido, and others, has expressed its position in a correspondence directed to the SEC’s crypto task force. They contend that the reasoning for the SEC’s recent determination that “proof-of-work” crypto mining is not a securities transaction under its purview should also apply to staking, thereby removing it from the securities designation.

According to the letter, “Stakers, similar to PoW miners, receive compensation based on outcomes defined by the protocol rather than through managerial actions or profit-sharing agreements.”

Staking involves users committing their coins for a designated duration to support the operation and security of a blockchain, earning returns in return. Stakeholders asserting their assets on “proof-of-stake” blockchain protocols contribute important technological services, emphasizing that their rewards are not merely passive investment returns.

The perspective held by CCI contrasts sharply with the former SEC leadership’s view, particularly under ex-chairman Gary Gensler, whose enforcement teams targeted cryptocurrency staking operations, notably including Kraken’s notable settlement with the SEC.

The CCI’s correspondence urged the SEC to issue guidance similar to that provided for memecoin issuers, miners, and certain stablecoin entities, indicating those activities are not within the SEC’s jurisdiction. Although such statements are not binding, they serve as indicators of current regulatory thinking.

The coalition indicated that state securities regulators are actively pursuing enforcement actions related to staking, suggesting that SEC guidance could clarify that the U.S. is endorsing sensible regulations that foster innovation in accordance with existing securities laws.

Since the beginning of Donald Trump’s presidency, the SEC has generally favored a more welcoming approach toward digital assets. Chairman Paul Atkins indicated at a recent crypto roundtable that he is open to reconsidering the agency’s treatment of cryptocurrency-related enterprises.

Crypto businesses are not alone in pushing for a shift in regulatory stances concerning staking. In February, several U.S. senators urged the SEC to re-evaluate its stance against staking within the context of the industry’s spot ETFs.