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How to Invest in Cryptocurrency Legally in 2025: What is allowed now after the SEC's latest step
The SEC’s 2025 guide outlines the regulatory stance on cryptocurrency custody. It specifies what is allowed and what is not, and how to deposit legally.
How to Invest in Cryptocurrency Legally in 2025: What is allowed now after the SEC's latest step
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Key points
The SEC made it clear that individual staking, delegated staking, and custodial staking, when directly linked to the network consensus process, are not considered securities offerings.
After the guidelines issued on May 29, the rewards earned from network validation are considered compensation for services, not profits from others' efforts, removing them from the amateur classification.
Validators, node operators, and retail or institutional investors can now participate without fear of regulatory uncertainty, encouraging wider adoption of Proof of Stake networks.
Yield farming and DeFi bundles guaranteed with investment returns and enticing lending schemes remain outside legal boundaries and can be treated as securities offerings.
On May 29, 2025, the SEC issued new guidelines on cryptocurrency custody to clarify regulatory aspects. Before the issuance of these guidelines, investors and service providers were uncertain whether regulators would consider deposit rewards as securities, exposing them to legal issues.
The SEC's latest step clearly defines what types of staking are permitted and what are not. The guidelines provide clear regulatory support for node operators, validators, and participating individuals, considering protocol staking an essential network function rather than a speculative investment.
This article explains how regulators will address cryptocurrency storage under the new rules, what activities are still prohibited, who will benefit, and what practices should be avoided.
Whether you are an individual validator or using a staking service, understanding these updates is essential to remain compliant in the United States.
The latest SEC guidelines on staking
In 2025, the U.S. Securities and Exchange Commission’s Corporate Finance Division issued groundbreaking guidelines outlining scenarios where staking protocols on Proof of Stake (PoS) networks would not be considered securities offerings.
This directive applies to individual staking, delegating to third-party validators, and custodial arrangements as long as these methods are directly linked to the network consensus process.
The SEC clarified that these staking activities do not meet the standards of an "investment contract" under the amateur test.
The regulatory body also distinguished between genuine staking protocols and schemes promising profits from others’ efforts, such as lending or speculative platforms.
According to the guidelines, staking rewards earned through direct involvement in network activities, such as validating transactions or securing the blockchain, will not be considered investment returns.
U.S. SEC Guidelines on Cryptocurrency Custody
What staking activities are permitted under the new SEC rules?
The SEC's Corporate Finance Division clarified that specified staking activities on Proof of Stake networks, when conducted as part of the network consensus process, are not considered securities offerings. These staking activities are considered administrative contracts, not investment contracts.
This is explicitly allowed by the guidelines:
Individual staking: New guidelines from the U.S. Securities and Exchange Commission (SEC) allow individuals using their crypto assets to stake using their resources and infrastructure. As long as they retain ownership and control over their assets and directly participate in the network validation, their staking is not treated as a securities offering.
Delegated staking (non-custodial): The SEC allowed users to delegate their validation rights to external node operators while retaining control over their crypto assets and private keys. This remains compliant with the rules as it does not involve transferring ownership or expecting profits from others' management efforts. The act of a node operator staking their own crypto assets does not change the amateur analysis of protocol staking.
Custodial storage: Custodians, such as cryptocurrency exchanges, can store assets on behalf of users if the assets are clearly held for the owner, not used for other purposes, and the process is transparently disclosed to the owner before the activity.
Enable validation services: This guide allows you to run validation nodes and earn rewards directly from the network. These actions are considered technical services, not an investment in a third party's business.
Did you know? Individual staking requires running your own node, often necessitating a high minimum of tokens, such as 32 Ethereum for Ethereum. Staking pools allow users to combine smaller amounts, facilitating access.
Ethereum
2,543 dollars
U.S. SEC Guidelines on Auxiliary Services in Cryptocurrency Trading
Service providers may offer "auxiliary services" to cryptocurrency asset owners. These services must be administrative or ministerial and not require entrepreneurial or managerial efforts.
Reduction coverage: Service providers may compensate owners for losses resulting from reductions, similar to protections in traditional business transactions, and cover errors by node operators.
Early unbonding: Protocols may return assets to their owners before the end of the unbonding period, shortening the waiting period for their owners.
Flexible reward schedules: Projects may offer staking rewards according to a schedule or frequency different from the protocol without specifying or guaranteeing amounts beyond what the protocol provides.
Asset aggregation: Protocols may aggregate owners’ assets to meet minimum staking requirements, an administrative step in the validation process that supports staking without being entrepreneurial.
How stakeholders in the Proof of Stake system will benefit from the SEC's new guidelines
The SEC's guidelines on protocol staking support various stakeholders in the Proof of Stake (PoS) system.
Key benefits include:
Validators and node operators can now stake assets and earn rewards without needing to register under securities laws. This clarity reduces legal risks for individual stakers and professional operators on networks like Ethereum, XDC, and Cosmos.
Developers of Proof of Stake networks and protocol teams: The guidelines confirm that protocol staking is not considered an investment contract, validating the designs of Proof of Stake networks. This enables developers to build their projects without compromising token economics or compliance structures.
Custodial service providers: Cryptocurrency exchanges and platforms offering custody services can operate legally by clearly disclosing terms and keeping assets in non-speculative separate accounts.
Individual investors and institutional participants: They can engage in individual or delegated staking with greater confidence. This clarity encourages compliance-focused institutions to join the Proof of Stake ecosystem.
These regulations are likely to encourage broader participation in staking, enhancing the security and decentralization propositions of blockchain by increasing the number and diversity of validators.
Did you know? The concept of "staking" dates back to 2012 with the "Peercoin" cryptocurrency, the first Proof of Stake (PoS) blockchain. Unlike mining, this concept allows users to "stake" coins to validate transactions, inspiring modern networks like "Ethereum Consensus Layer" and "Cardano" to prioritize energy efficiency and broaden participation.
Staking vs. securities: Where does the SEC draw the line?
While the latest SEC guidance facilitates protocol-based staking tied to network consensus, it clearly distinguishes between legitimate staking and activities that resemble investment contracts. The following practices remain outside the guidelines:
Yield farming or staking schemes not tied to consensus: Earning returns from depositing tokens in pools that do not contribute to blockchain validation or network security falls under securities laws.
Obscure DeFi products promising investment returns: Platforms offering complex and aggregated products with unclear reward sources or profit guarantees remain subject to regulatory scrutiny.
Centralized platforms disguising lending as staking: Services that lend users' funds or generate returns through third-party investments while calling it "staking" are not covered by the new guidelines and can be treated as unregistered securities.
This statement addresses custody protocols in general, not all of their forms. It does not cover all forms of custody, such as custody as a service, liquid custody, or re-custody. Node operators have the freedom to share rewards or charge for their services in ways that differ from the protocol.
SEC statement on certain protocol staking activities
Best practices for lawful cryptocurrency staking in 2025
As the SEC officially recognizes protocol trading as an activity unrelated to securities, participants and service providers should take considered compliance measures to remain within the security scope. These practices ensure clarity, protect user rights, and reduce regulatory risks.
Here are best practices related to lawful cryptocurrency staking in 2025, according to SEC guidelines:
Ensure that staking directly supports network consensus: Stake assets only in a manner that enables them to participate in validating the blockchain. Your investments should earn software rewards through the protocol, not through administrative or investment activities.
Maintain transparent custodial arrangements: Custodians must clearly disclose asset ownership, avoid using deposited assets for cryptocurrency trading or lending, and only act as agents to facilitate storage.
Consult a legal advisor before launching custody services: Seek legal advice to ensure that custody services are administrative in nature and comply with SEC guidelines.
Avoid offering fixed or guaranteed returns: The protocol should specify profits to prevent classification as an investment contract under the amateur test.
Use clear and standardized disclosures and contracts: Provide clear documentation explaining user rights, asset usage, fees, and custodial terms to avoid confusion.
Following these practices ensures that staking activities are compliant, transparent, and consistent with the SEC's focus on consensus-based participation.
Did you know? Staking can yield annual returns ranging from 5% to 20% on tokens like Cosmos and Tezos, providing passive income to cryptocurrency holders. Unlike trading, it's user-friendly—lock tokens, support the network, and earn rewards—making it a popular option for long-term investors.
Do the SEC's 2025 guidelines represent a turning point in cryptocurrency custody?
The SEC's 2025 guide is a significant step in the realm of cryptocurrency custody in the United States, providing clear rules for staking in Proof of Stake (PoS) protocols. The guide distinguishes between protocol staking, which supports network consensus, and products classified as investment contracts.
The SEC confirmed that self-staking, self-delegation, and custodial arrangements are not securities offerings, resolving a significant legal uncertainty that hindered participation.
This framework allows validators and individual users to delegate tokens to external node operators, provided they retain control over their assets or ownership. The SEC considers staking rewards as payments for services, not profits from management efforts, exempting them from the amateur test.
The guide creates a stable foundation for compliant staking infrastructure, encouraging institutional adoption and innovation in staking services and broader retail participation.
By prioritizing transparency, self-custody, and compliance with decentralized networks, the SEC's approach can foster the growth of Proof of Stake (PoS) systems while limiting risky or unclear staking practices. For the U.S. cryptocurrency sector, this regulatory approval is critically important.
