SEC's Crypto Staking Shift Sparks Controversy Among Officials

The US Securities and Exchange Commission (SEC) is under scrutiny from current and former officials due to its shifting position on crypto staking services. On May 29, the SEC’s Division of Corporation Finance released new guidance suggesting that certain crypto staking offerings might not be considered securities, thereby exempting proof-of-stake blockchains from registration requirements under the Securities Act.

This new interpretation, however, has been met with criticism from legal experts and former officials. John Reed Stark, former SEC chief of Internet Enforcement, argued that the SEC's latest move contradicts judicial findings in high-profile cases against crypto exchanges. In cases involving Binance and Coinbase, judges had previously allowed allegations that staking products qualified as securities under long-standing legal precedent. Stark described the SEC's shift as "a shameful abdication of its investor protection mission."

In the case of Binance, the SEC had alleged that the exchange’s staking services constituted unregistered securities offerings, but the case was ultimately dismissed with prejudice in May 2025. Similarly, in March 2024, a federal judge allowed the agency’s case against Coinbase to proceed, indicating that the SEC had “sufficiently pled” that the staking program involved the unregistered offer and sale of securities. The case was also dismissed in February 2025 as part of a broader shift in the SEC's approach to crypto regulation.

Sitting Commissioner Caroline Crenshaw also issued a statement on May 29, warning that the staff’s conclusions did not align with established case law or the Howey test. Crenshaw wrote, “The staff’s analysis may reflect what some wish the law to be, but it does not square with the court decisions on staking and the longstanding Howey precedent on which they are based.” She added that this approach reflects the SEC’s ongoing ‘fake it till we make it’ approach to crypto — taking action based on anticipation of future changes while ignoring existing law.

The commission has recently undertaken a series of deregulatory steps over digital assets, including closing investigations, dropping lawsuits, and launching roundtables to discuss regulation with industry participants. Critics argue that these actions have destroyed a once-proud 90-year legacy of the SEC.

While the SEC has framed its recent actions as part of an effort to provide regulatory clarity, critics contend that the result has been further confusion. In a June 2 statement, Crenshaw questioned the consistency of the commission’s approach, pointing to instances where the agency appeared to treat certain digital assets, such as Ether (ETH) and Solana (SOL) tokens, as securities.

Speaking at the Bitcoin 2025 conference in Las Vegas, Commissioner Hester Peirce pushed back against criticism of the agency’s new take on crypto, noting that the classification of a securities transaction depends more on the nature of the deal than the asset itself. Peirce stated, “Most crypto assets, as we see them today, are probably not themselves securities. That doesn’t mean that you can’t sell a token that is not itself a security in a transaction that is a securities transaction. That is where we really need to provide some guidance.”