Everstake Advocates for Non-Custodial Staking Clarity with SEC

Everstake, a prominent player in the cryptocurrency industry, has engaged in discussions with the Securities and Exchange Commission (SEC) to advocate for regulatory clarity on non-custodial staking. This dialogue underscores the growing importance of establishing clear guidelines for the rapidly expanding proof-of-stake networks, which currently hold over $193 billion in staked assets.

During these discussions, Everstake emphasized that non-custodial staking is a technical mechanism designed to maintain the integrity of decentralized networks, rather than a security transaction. Founder Sergii Vasylchuk highlighted that staking rewards are derived from the blockchain network's algorithmic functions, not from the managerial efforts of the staking provider. This distinction is crucial as it differentiates non-custodial staking from traditional investment models.

In a detailed letter submitted to the SEC’s Crypto Task Force, Everstake argued that non-custodial staking should not be classified as a security transaction. The firm pointed out that users retain control of their digital assets and do not pool their funds or expect profits from the staking provider's efforts. This position aligns with the Howey Test, which determines whether certain transactions qualify as investment contracts. Everstake posited that non-custodial staking does not meet the criteria set forth by this test, as users merely delegate validation rights while maintaining ownership of their assets.

Everstake further proposed specific criteria that could exempt non-custodial staking from being classified as a security. These criteria include asset control, lack of pooled funds, permissionless unstaking, and the provision of purely technical services. The firm also drew a comparison between non-custodial staking and proof-of-work mining, which the SEC has previously ruled out as a securities transaction. This comparison aims to advocate for a consistent regulatory approach across different blockchain mechanisms.

The SEC is currently in a deliberative phase regarding its official stance on non-custodial staking. While no definitive guidelines have been provided, the agency continues to engage with stakeholders, including those involved with decentralized staking. This engagement aligns with a broader push from various crypto advocacy groups urging the SEC for clearer staking regulations. The outcome of these discussions will be pivotal in shaping the future of staking in the U.S., as clear and consistent regulatory frameworks can foster a healthier environment for blockchain innovation.