SEC Clarifies PoS Staking Not Securities Transaction

The U.S. Securities and Exchange Commission (SEC) has finally provided clarity on Proof-of-Stake (PoS) staking, a contentious issue in the crypto world. In a surprising move, the SEC has officially stated that PoS staking, when conducted by individuals or decentralized protocols, does not constitute a securities transaction. This long-awaited guidance could significantly reshape the American crypto landscape, opening up new opportunities for both retail and institutional players.

For years, the SEC’s ambiguous stance on staking had hindered U.S. DeFi innovation. In 2023 and 2024, high-profile enforcement actions against exchanges led to multi-million dollar settlements and the delisting of staking products for American users. The chilling effect was immediate: U.S. participation in on-chain staking plummeted, and ETF issuers shelved plans to offer staking rewards. However, the new guidance, released in May 2025, marks a dramatic policy reversal. According to the SEC’s statement, “When an individual or decentralized protocol participates in Proof-of-Stake consensus and receives rewards, such activity does not, in itself, constitute an investment contract or securities transaction under the Howey Test.” The agency emphasized that this applies to direct, non-custodial staking, while centralized, pooled staking programs may still be subject to additional scrutiny.

This clarification is a major win for the cryptocurrency industry, as it provides much-needed regulatory clarity for PoS networks. The SEC's Division of Corporation Finance stated that proof-of-stake blockchain protocol staking activities are not considered securities. This means that staking on PoS networks is not a security offering, and staking rewards are considered payment for services to the network. The SEC also detailed rules for both solo and custodial staking, providing a clear framework for how these activities can be conducted without falling under securities regulations.

For retail investors, this means they can stake ETH, SOL, or other PoS assets directly from their wallet without worrying about violating securities laws. The main tax treatment — staking rewards as ordinary income remains, but the regulatory risk is gone. Expect a surge in U.S. on-chain participation this quarter. ETF issuers are also celebrating. BlackRock and Fidelity, both of whom have filed for spot ETH ETFs with staking features, can now move forward without fear of SEC pushback. “We expect to see staking rewards added to ETF products before year-end,” said ETF analyst.

The SEC’s move is expected to reignite U.S. DeFi innovation. Protocols like Lido, Rocket Pool, and native staking on Ethereum and Solana are likely to see a flood of new users. U.S. exchanges may cautiously relaunch non-custodial staking products, while ETF issuers can confidently add yield features to their offerings. Global markets are watching closely. The U.K., EU, and Singapore have already taken a lighter approach to staking, and the SEC’s shift could spark a new wave of regulatory harmonization.

This clarification from the SEC staff indicates that PoS crypto staking is not a securities offering. This statement was praised by some, who commended the clarity provided by the SEC. However, others warned that this clarification defies legal precedent and the Howey test, which is used to determine whether certain transactions qualify as "investment contracts" and thus securities. The SEC's new stance on PoS staking is a significant development for the cryptocurrency industry. It provides regulatory clarity for PoS networks, which could lead to increased adoption and innovation in the space. The clarification also paves the way for Ethereum ETF staking approval, which could be a major boost for the cryptocurrency market. However, it remains to be seen how the industry will respond to this new regulatory framework and whether it will lead to increased investment in PoS networks.