Key Takeaways (or, What You Should Probably Know Before Your Next Cup of Tea)
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The SEC has finally decided that solo staking, delegated staking, and custodial staking are not securities offerings. Yes, you heard that right! 🎉
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According to the new guidelines (which were probably written on a napkin), rewards from network validation are now considered compensation for services, not profits from the efforts of others. So, no more Howey test drama! 🙌
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Validators, node operators, and stakers can now frolic freely without the looming shadow of regulatory uncertainty. Hooray for PoS networks! 🌈
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However, yield farming and those sneaky ROI-guaranteed DeFi bundles are still outside the legal playground. Sorry, not sorry! 🚫
On May 29, 2025, the US Securities and Exchange Commission (or the SEC, for those who enjoy acronyms) issued new guidance on crypto staking. Before this, investors were as confused as a cat in a dog park about whether staking rewards were securities. Legal trouble was lurking like a bad smell in a crowded elevator.
The SEC’s latest move has clearly outlined which types of staking are allowed and which are not. It’s like a cosmic map for node operators, validators, and individual stakers, recognizing protocol staking as a core network function rather than a speculative investment. Who knew regulations could be so enlightening?
This article will explain how regulators will treat crypto staking under the new rules, which activities are still not allowed, who will benefit, and what practices to avoid. Spoiler alert: it’s all about compliance, folks!
The SEC’s Latest Guidance on Staking (or, How to Avoid Getting Your Toes Stepped On)
In 2025, the SEC’s Division of Corporation Finance released groundbreaking guidance stating when protocol staking on proof-of-stake (PoS) networks will not be considered a securities offering. Yes, it’s a mouthful, but bear with me!
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This guidance applies to solo staking, delegating to third-party validators, and custodial setups, as long as these methods are directly linked to the network’s consensus process. Simple, right? 🤔
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The SEC clarified that these staking activities do not meet the criteria of an “investment contract” under the Howey test. So, breathe easy!
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The regulator also made it clear that genuine protocol staking is not the same as those schemes promising profits from others’ efforts. No more shady business! 🕵️♂️
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According to the guidance, staking rewards earned through direct participation in network activities will not be viewed as investment returns. So, you can relax and enjoy your rewards!
Which Staking Activities Are Allowed Under the New SEC Rules? (Hint: Not All of Them!)
The SEC’s Division of Corporation Finance has clarified that specific staking activities on PoS networks, when conducted as part of a network’s consensus process, do not constitute securities offerings. These activities are viewed as administrative, not investment contracts. Who knew compliance could be so thrilling?
Here’s what the guidelines explicitly permit:
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Solo Staking: Individuals can stake their crypto assets using their resources and infrastructure. As long as they retain ownership and control of their assets, they’re in the clear! 🎊
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Delegated Staking (Non-Custodial): Users can delegate their validation rights to third-party node operators while keeping control of their crypto assets. It’s like lending your lawnmower to a neighbor but without the awkward conversations! 😅
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Custodial Staking: Custodians like crypto exchanges can stake on behalf of users if assets are clearly held for the owner’s benefit. Transparency is key, folks!
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Running Validator Services: You can operate validator nodes and earn rewards directly from the network. Think of it as providing technical services rather than investing in a third party’s business. Easy peasy!
Did you know? Solo staking requires running your own node, often with high minimum token requirements, like 32 Ether (ETH) for Ethereum. Staking pools let users combine smaller amounts, democratizing access. Who knew sharing could be so profitable?
SEC Guideline on Ancillary Services in Crypto Staking (or, What Else Can You Do?)
Service providers may offer “ancillary services” to owners of crypto assets. These services should be administrative or ministerial, not involving entrepreneurial or managerial efforts. Here’s what you can do:
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Slashing Coverage: Service providers may compensate owners for losses due to slashing. It’s like insurance, but for your crypto! 🛡️
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Early Unbonding: Protocols may return assets to owners before the protocol’s unbonding period ends. Because who likes waiting? ⏳
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Flexible Rewards Schedules: Projects may deliver staking rewards on a schedule that differs from the protocol’s. Flexibility is the name of the game!
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Asset Aggregation: Protocols may combine owners’ assets to meet staking minimums. Teamwork makes the dream work!
How the New SEC Guidelines Will Benefit Stakeholders in a PoS Ecosystem (or, Why You Should Care)
The SEC’s guidance on protocol staking supports various stakeholders in the PoS ecosystem. Here are the key benefits:
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Validators and Node Operators: They can now stake assets and earn rewards without registering under securities laws. This clarity reduces legal risks. Hooray for less paperwork! 📄
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PoS Network Developers and Protocol Teams: The guidance confirms that protocol staking is not considered an investment contract. Developers can grow their projects without altering token economics. Innovation, here we come!
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Custodial Service Providers: Crypto exchanges can operate legally by clearly disclosing terms. Transparency is the new black!
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Retail Investors and Institutional Participants: They can engage in solo or delegated staking with greater assurance. Compliance-focused institutions, welcome aboard!
These regulations will likely promote broader staking participation, strengthening PoS blockchain security and decentralization. More validators, more fun!
Did you know? The concept of staking dates back to 2012 with Peercoin, the first PoS blockchain. Unlike mining, it lets users “stake” coins to validate transactions. Who knew history could be so fascinating?
Staking vs. Securities: Where the SEC Draws the Line (or, What Not to Do)
While the SEC’s latest guidance facilitates protocol-based staking, it draws a clear line between legitimate staking and activities that resemble investment contracts. Here’s what’s still off-limits:
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Yield Farming or Staking Schemes Not Tied to Consensus: Earning returns from depositing tokens into pools that don’t contribute to blockchain validation still falls under securities laws. Sorry, folks!
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Bundled, Opaque DeFi Staking Products Promising ROI: Platforms that offer complex products with unclear reward sources remain at risk of regulatory scrutiny. Keep it simple, people!
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Centralized Platforms Disguising Lending as Staking: Services that lend user funds while labeling it “staking” do not qualify under the new guidance. No more disguises!
This statement addresses protocol staking generally rather than all of its variations. It doesn’t cover all forms of staking, such as staking-as-a-service or liquid staking. Node operators are generally free to share rewards or impose fees in ways that differ from the protocol. So, keep your eyes peeled!
Best Practices for Legal Crypto Staking in 2025 (or, How to Stay Out of Trouble)
As the SEC formally recognizes protocol staking as non-securities activity, participants should adopt thoughtful compliance measures. Here are the best practices:
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Ensure that Staking Directly Supports Network Consensus: Only stake assets in a way that they participate in blockchain validation. No funny business!
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Maintain Transparent Custodial Arrangements: Custodians must clearly disclose asset ownership. Transparency is key!
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Consult Legal Counsel Before Launching Staking Services: Seek legal advice to ensure compliance. Better safe than sorry!
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Avoid Offering Fixed or Guaranteed Returns: The protocol should determine the earnings. No promises!
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Use Clear, Standardized Disclosures and Contracts: Provide clear documentation explaining user rights. Clarity is your friend!
Following these practices ensures staking activities are compliant, transparent, and consistent with the SEC’s focus on consensus-based participation. Because who wants to deal with regulators?
Did you know? Staking can yield 5%-20% annual returns on tokens like Cosmos or Tezos, offering crypto holders passive income. It’s like finding money in your couch cushions!
Are 2025 SEC Guidelines a Turning Point for Crypto Staking? (or, Should We Celebrate?)
The SEC’s 2025 guideline is a significant step for crypto staking in the US, offering clear rules for staking in PoS protocols. The guideline separates protocol staking from yield-generating products classified as investment contracts. Clarity at last!
The SEC confirmed that self-staking, self-custodial staking, and specific custodial arrangements are not securities offerings. This resolves a major legal uncertainty that has hindered participation. Hooray!
This framework allows individual validators and users to delegate tokens to third-party node operators, as long as they maintain control or ownership of their assets. The SEC considers staking rewards as payment for services, not profits from managerial efforts. So, no more gray areas!
The guideline creates a stable foundation for compliant staking infrastructure, encouraging institutional adoption and greater retail participation. By prioritizing transparency and self-custody, the SEC’s approach could foster the growth of PoS ecosystems while discouraging risky practices. For the US crypto industry, this is a much-needed regulatory approval. Cheers to that! 🥳
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2025-06-13 19:32