SEC Delivers Rare Win for Crypto: Staking Escapes Securities Regulation
In a move that sent shockwaves through DeFi circles, the SEC just greenlit crypto staking—declaring it exempt from securities laws. No more regulatory sword dangling over Ethereum validators or Solana delegators.
Wall Street lawyers are already scrambling to parse the fine print, while crypto natives celebrate what looks like a strategic retreat by the watchdog. ’Turns out even regulators get tired of chasing decentralized tech,’ quipped one chain developer.
Of course, this being finance, the ruling comes with the classic hedge: ’For now.’ Because nothing gets traditional bankers sweating like passive income streams they can’t tax or control.
Types of staking covered
The guidance covers staking crypto on proof-of-stake networks and third-party operators, such as validators and custodians, for earning rewards.
The coverage includes three types of staking: self-staking, where participants stake their own assets; self-custodial staking, where owners delegate staking to node operators but keep ownership; and custodial staking, where custodians stake assets for customers.
However, the guidance does not cover practices like liquid staking and restaking, where providers have control over staking decisions that may still be subject to securities laws.
The staff guidance later claimed in a footnote that this was because the statement addresses protocol staking "generally rather than all of its variations."
It’s worth noting that the guidance only reflects the views of SEC staff, which means it’s non-binding and does not carry the force of law.
Commissioner disagrees
SEC Commissioner Caroline Crenshaw issued a sharp rebuke on Thursday, declaring crypto staking activities exempt from securities regulation run counter to applicable laws.
The dissenting commissioner also said the new guidance contradicts court precedent, citing two cases involving U.S. crypto exchanges Kraken and Coinbase. She also cited a separate dismissal for Binance, released on the same day.
As a result, Crenshaw said the agency was undergoing a "’fake it ’till we make it’ approach to crypto."
"Rather than promote clarity, this approach continues to sow uncertainty around what the law is and what parts of it the Commission is willing to enforce," she wrote.
Edited by Sebastian Sinclair
