SEC Staff Says Proof-of-Stake Crypto Staking Is Not a Security, Splitting Commissioners
SEC Declares Most Crypto Staking Activities Are Not Securities
New Staff Guidance Eases Concerns for Stakers, but Division Remains Inside Agency
Washington, D.C., May 29 — In a significant move for the crypto industry, the U.S. Securities and Exchange Commission’s Division of Corporation Finance announced that most protocol-based crypto staking activities on proof-of-stake blockchains do not qualify as securities transactions.
The staff statement, issued May 29, states that “Protocol Staking Activities” — where users stake crypto to support blockchain operations — do not require registration under the Securities Act, nor must they fit into any exemption category. The SEC clarified that staking rewards are payments for services rendered, not profits from someone else’s work — a crucial distinction under the Howey test, the legal standard for determining what counts as a security.
“Staking rewards are compensation for services provided by node operators, not investment profits,” the SEC staff noted.
Custodial and Ancillary Staking Services Also Exempt
The guidance further explained that custodial staking — where a third party stakes on a user’s behalf — is not considered a securities offering either, since custodians act only as intermediaries and do not control how or how much is staked.
Other routine staking-related functions such as slashing, early unbonding penalties, and alternative reward schedules were dismissed as “administrative or ministerial in nature,” rather than investment-related.
However, the SEC was careful to note that the statement does not address other types of staking such as liquid staking or restaking, and holds no legal weight as it is a staff interpretation — not a formal rule or enforcement action.
Commissioners Clash Over Legal Implications
Not all voices at the SEC are in agreement. Republican Commissioner Hester Peirce, who also leads the agency’s Crypto Task Force, welcomed the statement, saying it offers “long-overdue clarity for stakers and staking-as-a-service providers.”
“Uncertainty about regulatory views on staking discouraged Americans from doing so for fear of violating securities laws,” Peirce said.
“This undermined decentralization and network integrity on proof-of-stake blockchains.”
However, Democratic Commissioner Caroline Crenshaw sharply criticized the staff’s position, calling it “a wishful rewrite of existing law.”
“This guidance fails to provide a reliable roadmap. It doesn’t align with court decisions or the Howey test,” Crenshaw stated.
“It’s another example of the SEC’s ‘fake it till we make it’ approach to crypto — ignoring the law while anticipating future shifts.”
Industry Still Seeks Formal Guidance
The crypto community has been calling for clear and actionable regulatory guidance for months. At the Solana Accelerate conference earlier in May, developers and infrastructure providers urged the SEC to issue concrete rules around staking.
With legal uncertainties still looming over liquid staking, restaking, and other complex financial products tied to crypto infrastructure, the SEC’s latest move — while meaningful — may only be the beginning of a longer regulatory debate.
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