Clear regulatory guidance on crypto staking has been urged by a coalition of US Blockchain firms to the Securities and Exchange Commission (SEC).
The Council warned that overly strict staking regulations could hinder innovation and block market growth.
In an open letter dated April 30, the Crypto Council for Innovation led a coalition urging the SEC to apply the same clarity to staking that it recently applied to proof-of-work mining.
Staked Tokens Do Not Qualify as Securities
The Council argued that staking fundamentally serves as a technical process to maintain blockchain networks, rather than functioning as an investment contract.
It stated:
The benefits of staking to a PoS network and its participants are clear: base layer actors are incentivized to contribute to the security of the network, minimize the risk of manipulative activity, ensure data integrity, and bolster community trust in the network.
The article stressed that staking allows users to validate transactions, secure the network, and help produce new blocks. In return, participants receive token rewards determined by each network’s protocol, rather than by a centralized authority or profit-sharing arrangement.
The article emphasized that staking validates transactions, secures the network, and produces new blocks. In exchange, participants receive token-based rewards governed by each network’s protocol, rather than by a centralized entity or profit-sharing structure.
The Council asserted that this rationale should apply to staking as well, since both miners and stakers perform administrative tasks to maintain blockchain infrastructure and receive rewards based on the protocol’s rules.
Meanwhile, the letter acknowledged that certain risks exist, including the potential for slashing, where stakers lose tokens for breaching protocol rules.
However, the Council noted that slashing is rare and does not define staking’s economic model. Therefore, the Council maintains that staking should not be classified under securities laws.
The Case for Regulatory Clarity
The Crypto Council believes that formal guidance from the SEC would benefit many stakeholders, including developers, service providers, and end-users.
They argued that such clarity would eliminate uncertainties for platforms offering staking, especially those connected to crypto exchange-traded funds (ETFs).
The Council further stressed that regulatory clarity would help the US maintain competitiveness with other global jurisdictions, which are advancing more swiftly to promote innovation in the digital asset space.
However, experts expressed caution against overly strict regulations that could stifle innovation or perpetuate outdated market practices.
