In a big move for the crypto world, the U.S. Securities and Exchange Commission (SEC) released new guidance on Thursday, saying that most crypto staking activities are not considered securities under federal law—as long as certain rules are followed.
This announcement could be a game-changer. For years, there’s been confusion about whether staking—especially in proof-of-stake networks—counts as offering or selling securities. Now, the SEC says that typical protocol staking does not fall under the Securities Act of 1933 or the Securities Exchange Act of 1934.
What Is Protocol Staking?
Protocol staking is when someone locks up their cryptocurrency to help secure a blockchain network. These networks rely on a “consensus mechanism” that helps participants agree on the state of the network and verify transactions. In return for staking, users often earn rewards.
The SEC explained that when crypto assets are locked into a system that depends on them for technical operations—not for investment purposes—this doesn’t meet the legal definition of a security.
This applies to three types of staking:
- Self-staking: Users stake their own assets directly.
- Self-custodial staking: Users delegate staking but still keep full ownership.
- Custodial staking: A third party, like a custodian, stakes the assets for users.
What’s Not Included?
The SEC’s guidance does not apply to more complex practices like liquid staking or restaking. These methods often involve providers who have more control over user funds. Because of that control, they could still fall under securities laws.
The SEC added that the guidance focuses only on general protocol staking and doesn’t cover every variation. That means there may still be gray areas, especially for newer staking models.
Not Everyone Agrees
It’s important to note that this is staff guidance—it reflects the SEC staff’s view, but it’s not legally binding. And not all SEC commissioners are on board.
Commissioner Caroline Crenshaw strongly disagreed with the decision. She said it conflicts with past court rulings, including legal battles involving big crypto exchanges like Kraken and Coinbase. Crenshaw warned that this new direction could cause even more confusion about which crypto activities are legal and which are not.
“Rather than promote clarity, this approach continues to sow uncertainty around what the law is,” she wrote in her official statement.
Industry Reactions
Many in the crypto industry welcomed the news. Michael Bacina, an executive from the think tank Global Digital Finance, praised the move.
“The SEC’s process is more transparent than most global regulators, which is a strength of the U.S. system,” he said. Bacina also noted that staking without giving up control of your assets shouldn’t be treated the same as risky investments.
Crypto companies have been urging the SEC to clearly separate technical staking functions from investment contracts. They argue that staking is essential to blockchain operations and isn’t about profiting from someone else’s work.
What This Means for Crypto
The new SEC guidance may provide some relief to crypto projects and staking service providers. By drawing a line between passive investment and network participation, it gives clearer rules for staking in proof-of-stake systems.
But with opposing voices inside the SEC and legal battles still playing out, the debate over how crypto should be regulated is far from over.
For now, the guidance is a step forward—but not the final word.
