SEC Signals Green Light for Crypto Staking

SEC Clarifies Stance on Crypto Staking: It's Not Always a Security Offering

The SEC's Division of Corporation Finance has released a staff statement indicating that certain crypto staking activities do not fall under U.S. securities laws. This is welcome news for the industry, which has faced uncertainty and enforcement actions related to staking as a service.

Key Takeaways:

• No Enforcement Action: The SEC will likely not pursue action against entities involved in staking activities like node operation, validation, custody, delegation, and nomination.
• Mining Parallel: The SEC is seemingly drawing a parallel between staking and mining, clarifying that these consensus mechanisms, in general, do not inherently implicate securities laws.
• Ancillary Services Okay: Services like slashing insurance and modified unbonding periods for staked assets are also likely considered compliant.
• ETF Implications: This announcement is particularly timely, preceding deadlines for approving spot Ether ETFs with staking components. It may facilitate a faster approval process.
• Narrow Scope: The statement has caveats, specifically applying to "Covered Crypto Assets that do not have intrinsic economic properties or rights, such as generating a passive yield or conveying rights to future income, profits, or assets of a business enterprise."

Industry Reactions

Industry leaders view this as a positive, albeit incremental, step. Alison Mangiero, the head of staking policy at the Crypto Council for Innovation, noted the importance of having a staff statement asserting this position, especially after previous enforcement actions. Lorien Gabel, CEO of Figment, highlighted that the clarification allows US companies to confidently pursue various staking-related activities.