Related articles
On May 29, 2025, the U.S. Securities and Exchange Commission (SEC) issued a landmark statement through Commissioner Hester M. Peirce, clarifying that certain proof-of-stake (PoS) blockchain protocol staking activities are not considered securities transactions under federal securities laws. This announcement addresses long-standing regulatory uncertainty, offering a clearer path for stakers and staking-as-a-service providers to participate in decentralized networks. By removing regulatory barriers, the SEC’s guidance is set to enhance participation, foster innovation, and strengthen the crypto ecosystem. To fully appreciate the impact, let’s explore what staking is, its benefits to the crypto industry and investors, and the significance of this regulatory clarity.
Staking is a fundamental process in proof-of-stake (PoS) and delegated proof-of-stake (DPoS) blockchain networks. Unlike proof-of-work (PoW) systems, which rely on computational power to validate transactions and secure the network, PoS networks use a consensus mechanism where participants “stake” their cryptocurrency holdings to support network operations. By locking up a certain amount of crypto assets in a wallet or protocol, stakers help validate transactions, secure the network, and maintain its integrity. In return, they earn rewards, typically in the form of additional tokens.
Staking can be done directly by individuals (self-staking) or through staking-as-a-service providers, who manage the process on behalf of users. These providers may offer additional services, such as aggregating stakes to meet minimum requirements, protecting against penalties (known as “slashing”), or providing flexible reward payout schedules. Staking is integral to the security, decentralization, and efficiency of PoS blockchains like Ethereum, Cardano, and Solana.
Staking plays a critical role in the crypto ecosystem, offering benefits for both the industry and individual investors:
- Enhanced Network Security: Staking incentivizes participants to lock up their assets, ensuring the network remains secure and resistant to attacks. More stakers mean a more robust and decentralized network.
- Increased Decentralization: By encouraging widespread participation, staking reduces the risk of centralized control, aligning with the core ethos of blockchain technology.
- Energy Efficiency: Unlike PoW systems, which consume significant computational resources, PoS is far more energy-efficient, making staking an environmentally friendly alternative for securing blockchains.
- Innovation and Scalability: Staking supports the development of scalable, high-performance blockchains, enabling faster transactions and broader adoption of decentralized applications (dApps).
- Passive Income: Staking allows investors to earn rewards, typically in the form of additional tokens, providing a passive income stream similar to dividends or interest in traditional finance.
- Low Barrier to Entry: Staking-as-a-service providers make it easy for investors to participate without needing technical expertise or significant hardware investments.
- Portfolio Diversification: Staking rewards offer a way to grow crypto holdings, complementing other investment strategies in the volatile crypto market.
- Alignment with Network Growth: By staking, investors contribute to the health of the blockchain, potentially increasing the value of their holdings as the network grows.
Until now, regulatory uncertainty around staking has been a significant hurdle. Many Americans hesitated to participate, fearing that staking or offering staking services might be interpreted as securities transactions, potentially violating federal securities laws. This uncertainty constrained participation, weakened network decentralization, and limited the censorship resistance and neutrality that PoS blockchains aim to achieve.
The SEC’s statement, issued by the Division of Corporation Finance, provides much-needed clarity. It explicitly states that certain staking activities — whether self-staking by individuals or facilitated by non-custodial and custodial staking-as-a-service providers — are not securities offerings. This applies to staking on PoS and DPoS networks involving specific crypto assets. Furthermore, the SEC clarified that ancillary services, such as slashing coverage, early asset release before a protocol’s “unbonding” period, alternative reward schedules, or aggregating stakes, do not transform staking into a securities offering. This nuanced guidance ensures that staking providers can innovate and offer user-friendly services without regulatory concerns.
This announcement builds on the SEC’s earlier clarification that certain PoW mining activities are not securities transactions. Together, these statements reflect a pragmatic approach by the SEC’s Division of Corporation Finance and its Crypto Task Force to address the unique characteristics of blockchain technologies. By distinguishing between activities that secure decentralized networks and those resembling traditional securities, the SEC is fostering a regulatory environment that supports innovation while protecting investors. Commissioner Peirce emphasized that the Division and Crypto Task Force will continue to refine their views on the security status of other blockchain-related activities, suggesting more guidance may be forthcoming.
The SEC’s clarification is a pivotal moment for the crypto industry. By removing the specter of securities law violations, it unlocks several opportunities:
- Broader Participation: Individuals and institutions can now stake with confidence, strengthening PoS networks’ security and decentralization.
- Growth in Staking Services: Staking-as-a-service providers can expand their offerings, driving competition and improving user experiences with innovative features.
- Stronger Blockchain Ecosystems: Increased staking participation enhances the resilience, censorship resistance, and neutrality of PoS networks, aligning with their core principles.
- Investor Confidence: Clear regulatory guidance encourages more investors to explore staking as a way to earn passive income and engage with blockchain networks.
The SEC has opened the door for dialogue, encouraging stakeholders to contact the Division of Corporation Finance or the Crypto Task Force with questions via the SEC’s website or crypto@sec.gov. This commitment to engagement underscores the agency’s willingness to work with the crypto community as it navigates the evolving regulatory landscape.
Special thanks go to Cicely LaMothe, Acting Director of the Division of Corporation Finance, and her team for their diligent work in delivering this clear and impactful guidance. Their efforts are a step toward balancing innovation with regulatory clarity, a critical need in the fast-evolving crypto space.
The SEC’s statement that certain staking activities are not securities transactions is a major win for the blockchain industry. By clarifying the regulatory status of staking, the agency is empowering individuals, service providers, and investors to participate in PoS networks without fear of legal repercussions. This move not only strengthens the security and decentralization of blockchain ecosystems but also unlocks new opportunities for innovation and investment. As the SEC continues to refine its approach to crypto, this guidance sets a positive tone for the future of decentralized technologies in the United States. For stakers, developers, and investors, the message is clear: stake on, and help shape the future of blockchain.
