US crypto groups urge SEC for clarity on staking

Nearly 30 crypto advocate groups led by the lobby group the Crypto Council for Innovation (CCI) have asked the Securities and Exchange Commission for clear regulatory guidance on crypto staking and staking services.

The CCI’s Proof of Stake Alliance (POSA) group  argued  in an April 30 letter to the agency’s Crypto Task Force lead, SEC Commissioner Hester Peirce, that staking is fundamentally a technical process, not an investment activity. 

“Staking isn’t niche — it’s the backbone of the decentralized internet,” the  letter  said. 

The letter responded to the SEC’s call for public input on whether  staking  and liquid staking, where crypto users lock up their tokens to earn more, should be regulated under federal securities laws.

The coalition called for the SEC to support responsible inclusion of staking features in exchange-traded products (ETPs), and “avoid overly prescriptive rules that could freeze market structures and stifle innovation in the staking space.”

The group argued that staking fails to meet the securities-defining  Howey test  definition of an “investment contract” as stakers retain ownership of their assets.

They added that blockchain protocols, not a staking provider's efforts, determine rewards, and providers don’t deliver profits through managerial decisions like a company does. 

The letter requested that the SEC Issue principles-based guidance similar to recent SEC staff statements on proof-of-work mining.

“In the past 4 months, we’ve seen more movement and constructive dialogue with the SEC than in the past 4 years,” the group said. “Now, the industry is stepping up with concrete principles to include in guidance — a reflection of this new collaborative approach.”

The group argued that the existing securities disclosure regime is ill-suited for staking services, which are fundamentally technical rather than financial in nature. 

Big names in support of staking clarity 

The Proof of Stake Alliance includes several high-profile crypto organizations and companies, including the venture capital firm Andreessen Horowitz (a16z), blockchain software firm Consensys, and the crypto exchange Kraken, which  restored staking services  in the US earlier this year.

The SEC has yet to approve a crypto staking exchange-traded fund (ETF) and  delayed the decision  on allowing staking for Grayscale’s spot Ether ETF on April 14.

In April, Bloomberg ETF analyst James Seyffart predicted that an Ether ETF that includes staking  could come as soon as May .