🔵 $ADA Staking Is Not A Security, Declares The Founder Of Cardano After The Latest SEC Guidance
Charles Hoskinson, the founder and CEO of the research and development branch of Cardano Input | Output, has boldly stated that ADA staking is not a security.
He made this known by reacting to a press release from the SEC's Division of Corporation Finance regarding liquid staking activities.
The division defined liquid staking as the process of staking cryptocurrencies through a service provider or software protocol and receiving a receipt that represents the staked assets and expected returns.
It is well known that Cardano has an integrated staking model, which is part of its consensus layer. This model allows ADA holders to earn rewards by delegating their tokens to staking pools within the network.
The process of staking ADA does not meet the fundamental criteria of the Howey Test, a long-standing standard used to determine whether a transaction constitutes a security. By staking ADA through Cardano's model, users are not 'investing their funds' in a 'common enterprise' nor 'expecting profits solely from the efforts of others.'
Instead, they are simply delegating ADA to a staking group and earning passive income by securing the network and validating transactions, not as a profit-sharing mechanism of an entity.
🔸 Project Crypto Already Yielding Results
To put it in context, the recent SEC clarification is part of its recently launched initiative Project Crypto, aimed at modernizing the SEC's rulebook and transforming U.S. financial markets into an on-chain environment.
Less than a week after the SEC launched Project Crypto, Chairman Paul Atkins said that the initiative is already yielding results, as evident in the clarification of liquid staking activities.
He reiterated that his leadership is committed to providing clear guidance on the application of federal securities laws to emerging financial activities and technologies.
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