SEC Clarifies Crypto Staking Rules Boosting PoS Networks

The US Securities and Exchange Commission (SEC) has issued new guidance on May 29, 2025, clarifying which types of crypto staking activities are considered securities offerings and which are not. This move aims to bring regulatory clarity to the crypto staking landscape, which has long been shrouded in uncertainty. The SEC's latest guidance outlines that solo staking, delegated staking, and custodial staking, when directly tied to a network’s consensus process, do not qualify as securities offerings. This means that rewards earned from network validation are seen as compensation for services, not profits from the efforts of others, thereby removing them from the Howey test classification.

Validators, node operators, and retail or institutional stakers can now participate in staking activities without fear of regulatory uncertainty. This clarification is expected to encourage wider adoption of Proof-of-Stake (PoS) networks. However, yield farming, ROI-guaranteed DeFi bundles, and staking-disguised lending schemes remain outside legal bounds and may be treated as securities offerings. The SEC’s guidance provides clear regulatory support for node operators, validators, and individual stakers, recognizing protocol staking as a core network function rather than a speculative investment.

The SEC’s Division of Corporation Finance released groundbreaking guidance stating the scenarios when protocol staking on PoS networks will not be considered a securities offering. This guidance applies to solo staking, delegating to third-party validators, and custodial setups as long as these methods are directly linked to the network’s consensus process. The SEC clarified that these staking activities do not meet the criteria of an “investment contract” under the Howey test. The regulator also distinguished genuine protocol staking from schemes that promise profits from others’ efforts, like lending or speculative platforms. According to the guidance, staking rewards earned through direct participation in network activities, such as validating transactions or securing the blockchain, will not be viewed as investment returns.

The SEC’s Division of Corporation Finance has clarified that specific staking activities on PoS networks, when conducted as part of a network’s consensus process, do not constitute securities offerings. These protocol-staking activities are viewed as administrative, not investment contracts. The guidelines explicitly permit solo staking, where individuals use their crypto assets using their resources and infrastructure. As long as they retain ownership and control of their assets and participate directly in network validation, their staking is not treated as a securities offering. Delegated staking (non-custodial) is also allowed, where users delegate their validation rights to third-party node operators while keeping control of their crypto assets and private keys. Custodial staking is permitted if custodians like crypto exchanges stake on behalf of users if assets are clearly held for the owner’s benefit, not used for other purposes, and the process is transparently disclosed to the owner before the activity. Running validator services is also allowed, where you can operate validator nodes and earn rewards directly from the network. These actions are viewed as providing technical services rather than investing in a third party’s business.

Service providers may offer “ancillary services” to owners of crypto assets. These services should be administrative or ministerial, not involving entrepreneurial or managerial efforts. Slashing coverage, early unbonding, flexible rewards schedules, and asset aggregation are examples of ancillary services that are allowed under the new guidelines. These services support staking without being entrepreneurial and are considered administrative steps in the validation process.

The SEC’s guidance on protocol staking supports various stakeholders in the PoS ecosystem. Validators and node operators can now stake assets and earn rewards without registering under securities laws. This clarity reduces legal risks for individual stakers and professional operators on networks. PoS network developers and protocol teams can grow their projects without altering token economics or compliance structures. Custodial service providers can operate legally by clearly disclosing terms and keeping assets in separate, non-speculative accounts. Retail investors and institutional participants can engage in solo or delegated staking with greater assurance. These regulations will likely promote broader staking participation, strengthening PoS blockchain security and decentralization by increasing the number and diversity of validators.

While the SEC’s latest guidance facilitates protocol-based staking tied to network consensus, it draws a clear line between legitimate staking and activities that resemble investment contracts. Yield farming or staking schemes not tied to consensus, bundled, opaque DeFi staking products promising ROI, and centralized platforms disguising lending as staking are still outside the purview of the guideline. These practices do not qualify under the new guidance and could be treated as unregistered securities. The statement addresses protocol staking generally rather than all of its variations. It doesn’t address all forms of staking, such as staking-as-a-service, liquid staking, restaking, or liquid restaking. Node operators are generally free to share rewards or impose fees for their services in ways that differ from the protocol.

As the SEC formally recognizes protocol staking as non-securities activity, participants and service providers should adopt thoughtful compliance measures to stay within the safe zone. These practices ensure clarity, protect user rights, and reduce regulatory risk. Participants should ensure that staking directly supports network consensus, maintain transparent custodial arrangements, consult legal counsel before launching staking services, avoid offering fixed or guaranteed returns, and use clear, standardized disclosures and contracts. Following these practices ensures staking activities are compliant, transparent, and consistent with the SEC’s focus on consensus-based participation.

The SEC’s 2025 guideline is a significant step for crypto staking in the US, offering clear rules for staking in PoS protocols. The guideline separates protocol staking, which supports network consensus, from yield-generating products classified as investment contracts. The SEC confirmed that self-staking, self-custodial staking, and specific custodial arrangements are not securities offerings, resolving a major legal uncertainty that has hindered participation. This framework allows individual validators and users to delegate tokens to third-party node operators to operate, as long as they maintain control or ownership of their assets. The SEC considers staking rewards as payment for services, not profits from managerial efforts, exempting them from the Howey test. The guideline creates a stable foundation for compliant staking infrastructure, encouraging institutional adoption, innovation in staking services, and greater retail participation. By prioritizing transparency, self-custody, and alignment with decentralized networks, the SEC’s approach could foster the growth of PoS ecosystems while discouraging risky or unclear staking practices. For the US crypto industry, this is a much-needed regulatory approval.