In a significant push for regulatory clarity, nearly 30 cryptocurrency advocacy groups, spearheaded by the Crypto Council for Innovation (CCI), have appealed to the U.S. Securities and Exchange Commission (SEC) for explicit guidance on crypto staking. This call to action, articulated in an April 30 letter to SEC Commissioner Hester Peirce, underscores the coalition’s contention that staking is primarily a technical process rather than an investment activity.
Staking: A Technical Backbone
The Proof of Stake Alliance (POSA), a key player in this coalition, has emphasized that staking is not merely a niche activity but forms the very backbone of the decentralized internet. Their letter to the SEC was a response to the agency’s solicitation of public input on whether staking and its variant, liquid staking, should fall under the purview of federal securities laws.
The coalition has urged the SEC to facilitate the responsible integration of staking features into exchange-traded products (ETPs). They advocate against imposing overly prescriptive rules that could potentially stall market evolution and stifle innovation within the staking domain. According to the group, staking does not align with the Howey test, a standard used to define an “investment contract,” because stakers maintain ownership of their assets throughout the process.
The coalition’s argument hinges on the distinction that blockchain protocols, rather than staking providers, are responsible for determining rewards. Unlike companies that generate profits through managerial strategies, staking providers merely facilitate this technical process. The coalition is requesting the SEC to issue principles-based guidance akin to recent statements on proof-of-work mining, demonstrating an industry-wide shift towards collaborative regulatory engagement.
Industry Heavyweights Backing the Call
The Proof of Stake Alliance is not alone in this endeavor; it is supported by prominent crypto entities such as venture capital giant Andreessen Horowitz (a16z), blockchain software firm Consensys, and the crypto exchange Kraken, which notably revived its staking services in the U.S. earlier this year. The SEC’s hesitance to approve a crypto staking exchange-traded fund (ETF) remains palpable, with the decision on Grayscale’s spot Ether ETF deferred as recently as April 14.
Adding to the discourse, Bloomberg ETF analyst James Seyffart projected that an Ether ETF incorporating staking might emerge as soon as May, indicating a potential shift in the SEC’s stance. However, market dynamics remain unpredictable, as the regulatory environment continues to evolve.
A Collaborative Path Forward
The past few months have witnessed more constructive dialogue between the crypto industry and the SEC than the previous four years combined, according to the coalition. This engagement reflects a burgeoning collaborative approach, with the industry presenting concrete principles to inform regulatory guidance.
Despite the optimism, some analysts express skepticism regarding the SEC’s pace and willingness to adapt to the rapidly changing crypto landscape. There is an undercurrent of concern about whether regulatory actions will keep pace with technological innovation, especially in a sector as dynamic as cryptocurrency.
The coalition’s plea for clarity is not merely a call for immediate action but a broader appeal for a regulatory framework that can nurture innovation without compromising investor protection. As the debate continues, the crypto world watches closely, raising questions about whether these efforts will culminate in a balanced regulatory approach that fosters growth while safeguarding against potential risks.
In this unfolding narrative, the SEC’s next steps could significantly influence the trajectory of crypto staking and its integration into mainstream financial products. As stakeholders await further developments, the dialogue between regulators and the crypto industry appears poised at a critical juncture, with the potential to shape the future of digital finance.
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This article is based on: US crypto groups urge SEC for clarity on staking
Steve Gregory is a lawyer in the United States who specializes in licensing for cryptocurrency companies and products. Steve began his career as an attorney in 2015 but made the switch to working in cryptocurrency full time shortly after joining the original team at Gemini Trust Company, an early cryptocurrency exchange based in New York City. Steve then joined CEX.io and was able to launch their regulated US-based cryptocurrency. Steve then went on to become the CEO at currency.com when he ran for four years and was able to lead currency.com to being fully acquired in 2025.
