Urgent Call: US Crypto Groups Demand SEC Regulatory Clarity on Staking
The cryptocurrency industry is actively pushing for clear rules from regulators. In a significant move for the sector, nearly 30 US crypto advocate groups have formally requested that the Securities and Exchange Commission (SEC) provide definitive guidance on the legal status of crypto staking.
Why Regulatory Clarity on Staking is Needed
Led by the Crypto Council for Innovation (CCI), this coalition, specifically through its Proof of Stake Alliance (POSA) group, sent a letter to SEC Commissioner Hester Peirce. Their core argument is straightforward: staking is fundamentally a technical process that supports blockchain networks, not an investment activity that should fall under federal securities laws.
The groups emphasize that staking is crucial for the decentralized internet, stating, “Staking isn’t niche — it’s the backbone of the decentralized internet.” They argue that without clear regulatory clarity, innovation could be stifled, and market structures could become frozen.
Addressing the SEC’s Concerns
The letter directly responds to the SEC’s previous request for public input on whether staking and liquid staking services should be regulated as securities. The crypto groups contend that staking fails to meet the definition of an “investment contract” under the long-standing Howey test for several reasons:
- Stakers retain ownership and control of their underlying assets.
- Rewards are determined by the blockchain protocol’s rules, not the managerial efforts of a staking provider.
- Staking services are technical facilitators, not providers generating profits through business decisions.
They believe the existing securities disclosure framework is not suitable for staking services due to their technical nature.
The Importance of Proof of Stake
The coalition includes prominent organizations and companies involved in the Proof of Stake ecosystem and the broader crypto space. Members like Andreessen Horowitz (a16z), Consensys, and Kraken are part of the Proof of Stake Alliance, highlighting the industry’s unified stance.
The groups are advocating for the SEC to issue principles-based guidance for staking, similar to recent staff statements concerning proof-of-work mining. They noted a recent increase in constructive dialogue with the SEC over the past few months and see this letter as part of a new collaborative approach, offering concrete principles for potential guidance.
Implications for Crypto Regulation and ETFs
The push for clarity comes amidst ongoing developments regarding crypto products in the US market. While Kraken recently restored staking services for US users, the SEC has not yet approved an exchange-traded fund (ETF) that includes staking features.
The SEC notably delayed its decision on allowing staking for Grayscale’s spot Ethereum ETF in April. Market analysts have speculated that an Ether ETF with staking could potentially launch in the near future, but regulatory uncertainty remains a significant factor impacting such products and the broader landscape of crypto regulation.
The industry’s collective effort demonstrates a desire for proactive engagement with regulators to shape rules that support technological advancement rather than hindering it. The outcome of this dialogue will be critical for the future development and adoption of staking services in the United States.
Conclusion
The unified call from nearly 30 crypto groups to the SEC for clarity on staking underscores the industry’s commitment to responsible growth within a defined legal framework. By arguing that staking is a technical function rather than a security, they aim to pave the way for clearer rules, support for innovative products like staking-enabled ETFs, and foster an environment where the foundational technology of the decentralized internet can thrive without undue regulatory burden. The coming months will show if this collaborative approach leads to the specific, principles-based guidance the industry seeks.
