The Securities and Exchange Commission (SEC) has issued new guidance to clarify that the common form of crypto staking does not fall under the securities law.
On May 29, the SEC’s Corporation Finance division confirmed that those involved in staking activities, including self-measurement, delegated staking, custody and non-obligatory forms, do not need to register these actions with financial regulators.
The financial regulator said:
“Participants in protocol staking activities do not need to register for commission transactions under the Securities Act or do not need to fall under one of the registration exemptions in connection with staking activities in these protocols.”
This update also supports the use of related services. According to the SEC, these arrangements are not automatically classified as securities offerings, even if they provide features such as early withdrawal options, bundled rewards, reduction protections, or asset aggregation to meet minimal staking thresholds.
The agency emphasized that such enhancements would not change the fundamental nature of staking under federal law.
Staking is essential for blockchain networks that implement a consensus mechanism in which participants lock tokens to validate network transactions and earn rewards.
This process has generally proven controversial for years as the SEC pursued legal action against companies involved in its activities under former chairman Gary Gensler.
SEC Commissioner responds
SEC Commissioner Hester Peirce is a longtime advocate for clearer crypto regulations and supported the decision. She explained that staking is an important part of the proof of stake system. There, users contribute to network security by voluntarily locking tokens.
Peirce emphasized that despite its importance to blockchain infrastructure, it discouraged regulator users from being involved in these networks.
She said:
“This department’s statement can be applied to those who self-protect a specific target cryptocurrency.
However, not everyone on the committee agreed. Commissioner Caroline Crenshaw criticised the interpretation of staff and warned that it deviated from legal precedent.
She argued that the analysis overlooks the Howey Test, an important legal standard used to identify securities.
Crenshaw has been added:
“This is another example of the SEC’s ongoing “Fake It” being “Fake It” in cryptography. Take action in anticipation of future changes, ignoring existing laws. ”
What does this mean for ETFs?
The SEC position could have a great deal of implications for the Spot Ethereum Exchange-Traded fund, which is currently prohibited from immersing assets.
ETF Store President Nate Geraci noted that the guidance would remove any major regulatory obstacles to funds seeking to acquire Ethereum or other certified assets.
However, Geraci noted that there is a greater need from the Internal Revenue Service (IRS) particularly regarding how staking fees are handled within the Grantor Trust structures that ETFs normally use.
Smooth progression of staking integration into these ETFs can unlock new revenue streams for investors and enhance the appeal of crypto investment products within regulated markets
Meanwhile, the Ethereum ETF has gained momentum regardless, recording a nine-day inflow totaling over $480 million.
