FameEX Hot Topics | SEC: Select Staking Operations Fall Outside Securities Definition

On May 29, the U.S. Securities and Exchange Commission’s Division of Corporation Finance issued a comprehensive public statement clarifying that specific types of protocol staking activities on proof-of-stake (PoS) blockchain networks do not constitute securities offerings under federal law. The statement focused on “Covered Crypto Assets,” which refer to tokens fundamental to the functioning of PoS protocols—specifically those used to validate and secure blockchain operations. The Division relied on the Howey test, the standard used to determine whether a transaction involves an “investment contract,” and thus qualifies as a security under U.S. securities laws.

The Division’s staff clearly stated that these “Protocol Staking Activities” do not involve the offer or sale of securities. Consequently, participants engaged in these staking arrangements are not required to register their activities with the SEC under the Securities Act, nor must they qualify for an exemption. This position marks a notable clarification from the SEC’s Corporation Finance Division and offers a degree of legal certainty for crypto market participants who adhere to clearly defined staking structures.

The statement defined “Protocol Staking Activities” broadly to include solo staking of Covered Crypto Assets, as well as services provided by third-party entities such as node operators, validators, custodians, and nominators. It also includes ancillary services like slashing protection, flexible reward scheduling, and early unbonding options. The Division emphasized that these activities are administrative or ministerial in nature, not entrepreneurial or managerial. Because they do not meet the final requirement of the Howey test—that profits be derived primarily from the efforts of others—these staking activities are not considered securities transactions.

Importantly, the guidance applies to three specific staking models: self-staking (solo), staking while retaining self-custody but utilizing third-party infrastructure, and custodial staking where a third party stakes assets on behalf of users without making discretionary decisions. However, the Division explicitly excluded other models, such as liquid staking and restaking, where discretion or complex pooling mechanisms may introduce securities implications. The boundaries drawn here emphasize the critical role of decision-making authority in regulatory determinations.

Although the Division’s statement does not carry the force of law and is non-binding, it offers valuable interpretive guidance. For many in the crypto industry, the SEC’s clarification is a welcome step toward recognizing decentralized infrastructure operations as distinct from traditional securities offerings. Still, observers note that the regulatory landscape may shift as staking practices evolve and become more sophisticated.

Disclaimer: The information provided in this section is for reference only and does not represent any investment advice or the official views of FameEX.