The U.S. Securities and Exchange Commission (SEC) received a formal letter from a group of 30 leading blockchain organizations led by the Crypto Council for Innovation about securing clarity on whether staking services fall under federal securities regulations. The letter submitted to the SEC establishes that proof-of-stake network components, including staking, must be exempt from securities laws. The industrial alliance fought to stop blockchain innovation restrictions in American territory by demanding practical regulatory frameworks.
Coalition Asserts Staking Is a Technical Blockchain Process, Not a Security
In its letter addressed to Commissioner Hester Peirce, the coalition argued that staking is a technical function designed to secure blockchain networks, not an investment scheme that meets the criteria of the Howey Test. The group stated that staking participants retain control over their tokens, receive protocol-determined rewards, and are not reliant on a third party’s managerial efforts. The letter highlighted how existing U.S. securities laws are ill-suited to oversee decentralized blockchain infrastructure and called for principles-based guidelines that reflect the nuances of proof-of-stake systems.
SEC Pressure Grows Amid ETF Filings and Global Regulatory Progress
As the SEC continues delaying decisions on ETF proposals by firms such as Fidelity and VanEck, pressure is mounting from stakeholders to modernize staking regulation. The letter emphasized how global jurisdictions like the U.K. and Hong Kong have embraced clearer rules. The Crypto Council for Innovation stated that responsible staking frameworks, featuring smart contract audits, slashing risk disclosures, and clear user consent, can foster transparency without unnecessary regulation. Bloomberg analysts estimate a 75%-90% approval likelihood for some ETH ETF filings. Yet, uncertainty over staking treatment remains a sticking point.
According to the Crypto Council, staking providers are intermediaries rather than profit generators. Unlike traditional businesses governed by securities laws, they connect users to networks but do not guarantee profits. As institutional interest in Ethereum staking grows, particularly among ETF approval issuers, the lack of guidance risks stalling innovation and pushing activity offshore. The coalition called for a similar approach to the SEC’s guidance on proof-of-work mining, which explicitly excluded it from securities classification.
Industry Warns Innovation Will Shift Abroad Without Regulatory Clarity
Without tailored staking guidelines, the U.S. risks falling behind in the global digital asset race. The coalition argued that applying legacy securities law would harm innovation and competitiveness. They stressed that transparent, decentralized participation should not be discouraged by outdated frameworks. With other regions advancing regulatory clarity, American companies may shift staking operations abroad if the SEC fails to act decisively in the coming months. The letter marked a pivotal moment as the debate around staking regulation intensifies across crypto circles.
What’s Next: Will the SEC Redefine Staking to Support Crypto Innovation?
The SEC’s next action will influence how blockchain technology develops in the US. The urgent need for action is highlighted by the Crypto Council for Innovation’s call for a customized regulatory framework for crypto staking services. The clarity about crypto staking services would influence capital flow growth because institutional and retail participation keeps increasing. Major ETF approval issuers, along with global competitors, continue to progress, but their next moves depend heavily on the SEC’s decisions regarding crypto staking services, which will shape the development of Web3 throughout America.
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