Crypto Council Urges SEC to Exempt Staking from Securities Laws

The U.S. Securities and Exchange Commission (SEC) has received a formal letter from a coalition of 30 leading blockchain organizations, spearheaded by the Crypto Council for Innovation. The letter seeks clarity on whether staking services should be subject to federal securities regulations. The coalition argues that proof-of-stake network components, including staking, should be exempt from securities laws to prevent restrictions on blockchain innovation within the U.S.

The coalition, in its letter to Commissioner Hester Peirce, contends that staking is a technical function aimed at securing blockchain networks, not an investment scheme that meets the criteria of the Howey Test. The group asserts that staking participants retain control over their tokens, receive protocol-determined rewards, and are not dependent on a third party’s managerial efforts. The letter underscores that existing U.S. securities laws are not well-suited to oversee decentralized blockchain infrastructure and calls for principles-based guidelines that reflect the nuances of proof-of-stake systems.

As the SEC continues to delay decisions on ETF proposals by various firms, pressure is mounting from stakeholders to modernize staking regulation. The letter highlights how global jurisdictions have embraced clearer rules, emphasizing that responsible staking frameworks can foster transparency without unnecessary regulation. The Crypto Council for Innovation argues that staking providers are intermediaries rather than profit generators, connecting users to networks but not guaranteeing profits. As institutional interest in Ethereum staking grows, the lack of guidance risks stalling innovation and pushing activity offshore. The coalition calls for a similar approach to the SEC’s guidance on proof-of-work mining, which explicitly excluded it from securities classification.

The industry warns that without tailored staking guidelines, the U.S. risks falling behind in the global digital asset race. The coalition argues that applying legacy securities law would harm innovation and competitiveness. They stress that transparent, decentralized participation should not be discouraged by outdated frameworks. With other regions advancing regulatory clarity, American companies may shift staking operations abroad if the SEC fails to act decisively in the coming months. The letter marks a pivotal moment as the debate around staking regulation intensifies across crypto circles.

The SEC’s next action will significantly influence how blockchain technology develops in the U.S. The urgent need for action is highlighted by the Crypto Council for Innovation’s call for a customized regulatory framework for crypto staking services. Clarity about crypto staking services would influence capital flow growth because institutional and retail participation keeps increasing. Major ETF approval issuers, along with global competitors, continue to progress, but their next moves depend heavily on the SEC’s decisions regarding crypto staking services, which will shape the development of Web3 throughout America.