On the twenty-ninth day of May, in the year of our Lord two thousand and twenty-five, the esteemed Division of Corporation Finance, under the auspices of the SEC, did graciously bestow upon us their enlightened views regarding the rather curious practice of staking within networks that employ the proof-of-stake mechanism. One might say, it is a matter of great import, though perhaps not as riveting as a ball at Netherfield.
In their infinite wisdom, the Division has concluded that such protocol staking activities do not, in fact, constitute offerings of securities under the federal laws of our great nation, and thus, no registration shall be required. How delightful! One can almost hear the sighs of relief echoing through the halls of crypto enthusiasts.
“Accordingly, it is the Division’s view that participants in Protocol Staking Activities do not need to register with the Commission transactions under the Securities Act, or fall within one of the Securities Act’s exemptions from registration in connection with these Protocol Staking Activities.”
CRYPTO IS WINNING! 🎉
Indeed, the SEC has proclaimed that staking on PoS networks is free from the shackles of securities. This is, without a doubt, a momentous occasion!
— Kyle Chassé / DD (@kyle_chasse) May 30, 2025
Staking: A Most Unremarkable Affair
The statement did address three principal types of staking arrangements: the self (or solo) staking, wherein node operators stake their own crypto assets with their own resources; the self-custodial staking with third parties, where asset owners graciously grant validation rights to third-party node operators whilst retaining ownership and control; and lastly, the custodial arrangements, where third-party custodians hold and stake crypto assets on behalf of their owners. Quite the mouthful, is it not?
Applying the Howey test, the Division concluded that protocol staking does not meet the criteria of an “investment contract.” This is due to the absence of reliance on the entrepreneurial efforts of others, as the rewards from staking arise from administrative and ministerial activities, rather than from the whims of managerial decisions. How very refreshing!
Moreover, there exists no common enterprise based on the efforts of others, as participants earn their rewards through their own compliance with the protocol, rather than from the successes of third parties. In essence, staking activities are more akin to the provision of services than to an investment in a profit-generating enterprise. Who would have thought?
Christopher Perkins, the President of CoinFund, did express his gratitude to the SEC for providing the clarity that the industry has long sought. A round of applause is surely in order!
Thank you to the @SECGov and the Crypto Task Force for what should have been table stakes all along—a little thing called CLARITY.
— Christopher Perkins NYC (@perkinscr97) May 29, 2025
Nate Geraci, President of the ETF Store, also joined in the celebration, declaring this news to be “Another hurdle cleared for staking in spot Ether ETFs.” One can only imagine the jubilation!
The CLARITY Bill: A Most Fortuitous Development
In a related turn of events, on the same day, US lawmakers did introduce a bipartisan regulatory framework for crypto assets, aptly named the “Digital Asset Market Clarity Act of 2025,” or, as it is affectionately known, the “CLARITY Act of 2025.”
This Clarity Act seeks to delineate the roles of the SEC and the Commodity Futures Trading Commission (CFTC) in the realm of crypto regulations, in a noble effort to ascertain which agency shall wield oversight. How thrilling!
Chairman of the House Committee on Financial Services, French Hill, who had the audacity to introduce this bill, proclaimed, “Our bill brings long-overdue clarity to the digital asset ecosystem, prioritizes consumer protection and American innovation.” A most commendable sentiment!
“America should be the global leader in the digital assets marketplace – but we can’t do that without establishing a clear regulatory framework,” added the bill’s sponsor, Dusty Johnson. One can only hope that clarity shall reign supreme!
NEW: Chairman @RepFrenchHill today introduced the CLARITY Act, a bipartisan bill which would establish a regulatory framework for digital assets in the US.
Read more
— Financial Services GOP (@FinancialCmte) May 29, 2025
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2025-05-30 23:16