Covered Crypto Assets and Staking Methods
In its Statement on Certain Protocol Staking Activities, the SEC staff defines "Covered Crypto Assets" as tokens integral to a PoS network's operation but lacking intrinsic economic rights (e.g., no guaranteed yield or profit share), confirming that participating in protocol staking of such assets is not considered a securities offering. Three staking methods are addressed:
- Self (Solo) Staking – A node operator stakes crypto assets it owns and controls on its own infrastructure.
- Self-Custodial Staking with Third-Party Node – Asset owners delegate validation rights to a third-party node operator but retain ownership and control of the staked assets.
- Custodial Staking – A custodian (e.g., an exchange) stakes customers' assets on their behalf, while customers retain ownership of the assets per the user agreement.
Ancillary Services
The staff further noted that providing routine ancillary services in connection with staking does not change this analysis. Services like slashing coverage (compensating users for penalties), early unbonding ("where a Service Provider allows Covered Crypto Assets to be returned to an owner before the end of the protocol's unbonding period"), alternate rewards payment schedules (an "optional convenience afforded to Covered Crypto Asset owners" which allows service providers to "deliver[] earned rewards at a cadence and in an amount that differs from the protocol's set schedule"), or stake aggregation (which allows "Covered Crypto Asset owners to aggregate their Covered Crypto Assets to meet the protocol's staking minimums") are deemed ministerial conveniences. These add-ons alone do not involve the entrepreneurial or managerial efforts that would turn the activity into an investment contract.
Conclusion
The statement's scope is limited. It does not address other forms of staking such as "liquid staking" or "restaking," which may raise different legal issues. The statement reflects only the staff's views and has no binding legal effect. Whether a specific crypto staking arrangement constitutes a securities transaction remains a fact-driven inquiry under the Supreme Court's Howey test, which focuses on the economic realities of the transaction, as noted by Commissioner Crenshaw. Accordingly, those offering staking could still face private lawsuits and state securities law enforcement.
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