Crypto Coalition Appeals to SEC, Arguing Staking Is a ‘Necessary Good’ Not a Security
Jesse Hamilton | Edited by Nikhilesh De on April 30, 2025, 2:00 PM
The Crypto Innovation Council is writing to the U.S. Securities and Exchange Commission, arguing that staking is not only beneficial to digital asset markets, but should not be subject to regulation by the securities regulator.
The coalition, a group of staking stakeholders that includes Kraken, a16z, Lido, Galaxy, Figment, Polychain, and Paradigm, insisted in a letter to the agency’s cryptocurrency task force that the logic behind the SEC staff’s recent statement that “proof-of-work” cryptocurrency mining is not a securities transaction under the agency’s oversight should be extended to the practice of staking, thereby exempting it from securities regulation.
“Staking participants, like PoW miners, are rewarded based on results determined by the protocol, not by management actions or profit-sharing agreements,” the letter, reviewed by CoinDesk, notes.
When users stake their coins, they agree to lock them up for a certain period of time to participate in the operation and security of the blockchain, and they earn income for doing so. Those who stake their crypto assets on proof-of-stake blockchain protocols provide “valuable technical services,” and the rewards received do not constitute passive investment income, the group argues.
Read more: Crypto Staking Basics: What is Staking?
The CCI’s opinion contradicts the SEC’s previous position, when staff under previous Chairman Gary Gensler took aim at cryptocurrency staking operations, such as the high-profile Kraken settlement, as well as other cases including one involving Consensys. The SEC also banned staking in exchange-traded funds (ETFs) tracking Ethereum (ETH) as it reviews applications for those products in 2024.
CCI’s letter asks the SEC to provide guidance similar to what it has done for memecoin issuers, miners, and some stablecoin issuers, arguing that their activities fall outside the agency’s legal concerns. While these statements are not binding — not even formal guidance — they are intended to serve as markers for establishing
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