In a significant policy pivot, the SEC's Division of Corporation Finance issued new guidance stating that many crypto "staking" services are not securities offerings under federal law. Staking typically refers to the process by which a user locks up a certain amount of cryptocurrency in a blockchain network that operates on a proof-of-stake or delegated proof-of-stake consensus mechanism. This staked cryptocurrency helps support network functions such as transaction validation and block production. In return for this participation, users, whether acting as validators, may receive token-based rewards. The guidance concluded that users or node operators who stake tokens to secure proof-of-stake blockchains are not engaging in investment contracts, because the expected rewards stem from ministerial or technical actions, not entrepreneurial efforts by others, a key element of the Howey test.1
The guidance, released May 29, 2025, came just hours after the SEC voluntarily dismissed its lawsuit against Binance, which had included staking-related claims.2 That same day, Republican Commissioner Hester Peirce praised the statement as long-overdue clarity that removes "artificial constraints" on staking participation and better supports decentralization.3 The Proof of Stake Alliance and Crypto Council for Innovation called the move a "win" for the crypto community, emphasizing that staking is a core blockchain function, not an investment activity.4
Commissioner Caroline Crenshaw, the Commission's sole Democrat, issued a sharply worded dissent. She noted that the staff's position contradicts recent court rulings in the SEC's favor, which had allowed staking-related securities claims against Coinbase and Binance to proceed. Crenshaw also pointed to the SEC's 2023 $30 million settlement with Kraken as evidence of a longstanding view that certain staking programs fall within the Commission's jurisdiction.5
She further criticized the guidance for its lack of clarity, especially regarding common "ancillary" features like token pooling, slashing protection, and early withdrawal mechanisms, elements she argues could easily satisfy Howey's "efforts of others" prong. Crenshaw warned that the new approach may obscure legal boundaries, reduce investor protections, and create uncertainty for compliance professionals.
While some see the guidance as a step toward regulatory modernization, especially as the SEC weighs staking-based ETF applications, others caution that staff interpretations are not binding law.6 Without formal rulemaking or legislative action, the real test of this new stance will be in the courts, and possibly Congress.
It's important to note that this guidance applies only to a defined set of "Protocol Staking Activities", including staking Covered Crypto Assets on proof-of-stake (PoS) networks. These include (1) staking such assets directly on a PoS network; (2) the roles of third-party service providers involved in staking, such as node operators, validators, custodians, delegates, and nominators, particularly in connection with reward earning and distribution; and (3) the provision of ancillary services related to staking. The guidance applies specifically to the following staking structures: (i) self or solo staking, where a node operator stakes its own assets using its own resources; (ii) self-custodial staking with a third party, where validation rights are delegated to a node operator, with rewards flowing directly or indirectly to asset owners; and (iii) custodial arrangements, where a custodian stakes on behalf of asset owners, including crypto trading platforms staking deposited assets with customer consent, either through their own node or a selected third-party operator. Other models fall outside the scope of the statement.
Footnotes
1 U.S. Securities and Exchange Commission. (2025, May 29). Staff Statement on Certain Protocol Staking Activities. https://www.sec.gov/newsroom/speeches-statements/statement-certain-protocol-staking-activities-052925
2 Reuters. (2025, May 29). US SEC voluntarily dismisses lawsuit against Binance. https://www.reuters.com/sustainability/boards-policy-regulation/us-sec-voluntarily-dismisses-lawsuit-against-binance-2025-05-29/#:~:text=May%2029%20(Reuters)%20%2D%20The,Trump%20reentered%20the%20White%20House.
3 Peirce, H. (2025, May 29). Providing Security is not a "Security". SEC Statement. https://www.sec.gov/newsroom/speeches-statements/peirce-statement-protocol-staking-052925
4 Cointelegraph. (2025, May 30). SEC crypto staking guidance 'major step forward' for US, says POSA. https://cointelegraph.com/news/sec-crypto-staking-guidance-win-crypto-regulations
5 SEC. (2023, February 9). Kraken to shut down staking program, pay $30 million to settle SEC charges. https://www.sec.gov/news/press-release/2023-25
6 CoinDesk. (2025, May 31). Crypto Staking Doesn't Violate U.S. Securities Law, SEC Says. https://www.coindesk.com/news-analysis/2025/05/29/crypto-staking-doesnt-violate-us-securities-law-sec-says
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