In a significant development for the industry, the US Securities and Exchange Commission’s (SEC) Division of Corporation Finance shared its view on crypto staking after the recent call for clear guidance on the sector. The SEC branch seeks to “provide greater clarity on the application of the federal securities laws to crypto assets.”
Therefore, these activities, including self-staking, self-custodial staking with direct third-party validators, and custodial staking where platforms stake assets on behalf of customers, don’t meet the criteria for an investment contract under the Howey Test and don’t involve the offer and sale of securities.
“Providing Security is not a ‘Security,’” she affirmed, adding that the unclear rules “artificially constrained participation in network consensus and undermined the decentralization, censorship resistance, and credible neutrality of proof-of-stake blockchains.”
Acknowledging the SEC’s regulatory shift under the Trump administration, the letter argued that the existing securities disclosure regime was ill-suited for staking services, which are fundamentally technical instead of financial.
The crypto coalition asked for clear, principles-based guidance for staking and staking services, citing the SEC’s March statement on Proof-of-Work (PoW) mining, to protect users while enabling the growth of the staking industry.
Crenshaw considers that the Division of Corporation Finance’s analysis “may reflect what some wish the law to be, but it does not square with the court decisions on staking and the longstanding Howey precedent on which they are based,” affirming that “This is yet another example of the SEC’s ongoing ‘fake it ‘till we make it’ approach to crypto – taking action based on anticipation of future changes while ignoring existing law.”
