- Over 30 crypto firms urge the SEC to treat staking as a technical process, not a security.
- The coalition seeks clear guidelines to protect users while enabling growth of staking services.
- The industry called for principles-based guidance to avoid freezing innovation in PoS networks.
Over 30 top crypto firms have joined the Crypto Council for Innovation to pressure the SEC for staking clarity. The coalition submitted a detailed letter on April 30 urging the SEC to define staking as a technical process. The companies argue staking should not be regulated under traditional securities laws.
The letter was addressed to Commissioner Hester Peirce, who had previously invited public comment on staking regulation. It states that staking is vital to proof-of-stake (PoS) blockchains and enables network security and decentralization. The firms claim current rules are unclear and risk harming U.S. innovation.
According to the Crypto Council, staking helps run the decentralized internet. It supports validators, reduces reliance on centralized actors and empowers application development. As such, they argue, it is a software function, not a financial service.
The coalition has proposed a set of staking principles to guide future regulation. These include requiring service providers to explain to the customer what services they provide. Users should be able to retain ownership of staked assets and set the amount they want to stake. Also they must be able to unstake without losing control of their funds.
The letter also stresses the importance of transparency. It’s important for providers to disclose on risks like slashing and also how fees work. They have to refrain from using terms like ‘guaranteed returns’ or implying staking is a risk free investment. The Crypto Council likened staking to proof-of-work (PoW) mining, which the SEC doesn’t view as a securities activity. The council wants staking treated similarly. They argue rewards come from blockchain protocols, not third-party profit schemes.
The letter also warns against rigid rules that might freeze market structures. Overregulation, they say, would hinder growth and block U.S. leadership in blockchain.
Related: OpenSea Seeks SEC Clarity on NFT Marketplace Regulations
Devin Walsh, executive director at the Crypto Council, said this moment is critical. In the past four months, she noted, dialogue with the SEC has improved. The industry now hopes this engagement will lead to useful guidance.
Staking allows token holders to participate in network validation and earn rewards. It has become common across PoS networks like Ethereum. As its use grows, its legal classification has become a major topic.
The SEC has yet to issue formal rules on staking. However, past enforcement actions against staking as a service providers suggest the agency sees it as a regulated activity. Firms hope the SEC will recognize staking as a tool, not a security. They believe clear rules will support innovation and protect users across the crypto ecosystem.
