FameEX Hot Topics | SEC: Certain Staking Practices Not Considered Securities

On May 29, the U.S. Securities and Exchange Commission’s Division of Corporation Finance released a detailed public statement clarifying that certain protocol staking arrangements on proof-of-stake (PoS) networks do not qualify as securities offerings under federal law. The statement specifically addresses “Covered Crypto Assets,” which are tokens essential to PoS networks and used in the validation and security of blockchain operations. The Division based its determination on the Howey test, a legal standard that determines whether a transaction constitutes an “investment contract” and therefore a security.

The Division’s staff stated unequivocally that “Protocol Staking Activities” do not involve the offer or sale of securities. Accordingly, participants in these activities are not required to register with the Commission under the Securities Act, nor do they need to seek an exemption. This represents a significant stance by the SEC’s Corporation Finance Division, suggesting that, under defined conditions, crypto users can engage in staking without falling under federal securities regulations.

According to the statement, “Protocol Staking Activities” include staking Covered Crypto Assets, third-party services provided by validators, node operators, custodians, and similar roles, and ancillary services such as slashing protection and reward scheduling. The Division emphasized that these roles are administrative or ministerial in nature and not entrepreneurial or managerial. As such, they do not satisfy the final prong of the Howey test, which requires that profits be derived primarily from the efforts of others.

The guidance applies to three specific models: solo staking, direct staking with third parties while maintaining self-custody, and custodial staking where the custodian stakes assets without exercising discretion. The SEC staff explicitly excluded other models—such as liquid staking or restaking arrangements—from this guidance. If a custodian has authority to decide how or when to stake assets, the activity may still fall under securities regulations. This distinction underscores the importance of operational transparency and control in staking structures.

While the statement reflects the views of the Division’s staff and does not carry legal force, it provides meaningful guidance for market participants. Industry proponents see the move as a positive step toward regulatory clarity, while some legal analysts caution that the SEC’s position could evolve as staking models grow more complex or centralized. Still, this articulation helps affirm that certain staking practices resemble infrastructure maintenance more than investment schemes.

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