A request for legal clarity on crypto staking has been made by a group of nearly 30 crypto advocacy organizations, which argue that staking should not be classified as an investment activity, according to the SEC.
Nearly 30 crypto advocacy groups, led by the Crypto Council for Innovation (CCI), have urged the Securities and Exchange Commission to provide clear regulatory guidance on crypto staking and staking services.
In an April 30 letter to the SEC’s Crypto Task Force lead, Commissioner Hester Peirce, the CCI’s Proof of Stake Alliance (POSA) group argued that staking is fundamentally a technical process rather than an investment activity.
The letter stated that staking is not a niche activity but serves as the backbone of the decentralized internet.
The group responded to the SEC’s request for public input by writing a letter on whether staking and liquid staking—where users lock tokens to earn rewards—should fall under federal securities laws.
The coalition urged the SEC to support the responsible inclusion of staking features in exchange-traded products (ETPs) and to “avoid overly prescriptive rules that could freeze market structures and stifle innovation in the staking space.”
The group argued that staking does not meet the Howey test definition of an “investment contract” because stakers retain ownership of their assets.
Major Industry Players Back Staking Regulation Clarity
The report adds that blockchain protocols determine rewards, rather than relying on the efforts of a staking provider. Unlike companies, where managerial decisions drive profits, staking earnings come directly from the protocol’s design.
The group stated that they had seen more progress and meaningful discussions with the SEC in the past four months than in the previous four years. “Now, the industry is presenting concrete principles for inclusion in guidance, reflecting this new spirit of collaboration,” they added.
The group argued that the current securities disclosure regime does not fit staking services well, since these services are primarily technical rather than financial in nature.
The Proof of Stake Alliance includes several high-profile crypto organizations and companies, such as venture capital firm Andreessen Horowitz (a16z), blockchain software firm Consensys, and crypto exchange Kraken, which restored its staking services in the US earlier this year.
The SEC has not yet made a decision on approving a crypto staking exchange-traded fund (ETF), and it delayed its ruling on whether to allow staking for Grayscale’s spot Ether ETF on April 14.
In April, Bloomberg ETF analyst James Seyffart predicted that an Ether ETF with staking could launch as early as May.
