SEC Clarifies Crypto Staking Rules, Exempts 75% of Activities from Securities Laws

The US Securities and Exchange Commission (SEC) has issued new guidance on crypto staking, clarifying which activities are considered securities offerings and which are not. The guidance, released on May 29, 2025, aims to bring regulatory clarity to the crypto staking landscape, which has long been shrouded in uncertainty.

The SEC's latest move 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, as it provides a clear regulatory framework for these activities.

However, yield farming, ROI-guaranteed DeFi bundles, and staking-disguised lending schemes remain outside legal bounds and may be treated as securities offerings. These activities are not considered part of the network’s consensus process and are therefore subject to securities regulations.

The SEC’s 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 regulator has distinguished genuine protocol staking from schemes that promise profits from others’ efforts, such as lending or speculative platforms.

Under the new rules, staking rewards earned through direct participation in network activities, such as validating transactions or securing the blockchain, will not be viewed as investment returns. This clarification is a significant step for the crypto industry, as it provides a stable foundation for compliant staking infrastructure.

The guidance also outlines specific staking activities that are allowed under the new SEC rules. These include solo staking, where individuals use their own resources and infrastructure to stake their crypto assets; delegated staking, where users delegate their validation rights to third-party node operators while retaining control of their assets; and custodial staking, where custodians like crypto exchanges stake on behalf of users as long as assets are clearly held for the owner’s benefit.

Service providers may offer ancillary services to owners of crypto assets, such as slashing coverage, early unbonding, flexible rewards schedules, and asset aggregation. These services should be administrative or ministerial, not involving entrepreneurial or managerial efforts.

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, reducing legal risks for individual stakers and professional operators. 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, encouraging compliance-focused institutions to join the PoS ecosystem.

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 do not qualify under the new guidance and could be treated as unregistered securities.

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.

The SEC’s 2025 guideline is a significant step for crypto staking in the US, offering clear rules for staking in PoS protocols. 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. This approach could foster the growth of PoS ecosystems while discouraging risky or unclear staking practices, providing a much-needed regulatory approval for the US crypto industry.