Crypto Council Demands SEC Clarify Staking Rules to Safeguard U.S. Innovation

    Explore how the Crypto Council for Innovation is urging the SEC to exclude staking services from securities laws to protect U.S. blockchain innovation.

    Archisha Mondal

    Author by

    Archisha Mondal

    Mehraneh Hosseini

    Edited by

    Mehraneh Hosseini

    Updated May 01, 2025 10:57 AM GMT+0
    Crypto Council Demands SEC Clarify Staking Rules to Safeguard U.S. Innovation

    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.

    Archisha Mondal

    Archisha Mondal

    Author

    I'm Archisha Mondal, a content writer currently immersed in the dynamic world of crypto. With a strong foundation in Sociology from St. Xavier’s College and several years of experience across diverse content niches, I bring a unique blend of analytical depth and creative clarity to my writing. Today, I focus on translating complex crypto trends, market movements, and blockchain innovations into clear, engaging narratives for a wide audience. Whether it’s breaking down DeFi protocols, exploring meme coin surges, or analyzing Bitcoin’s price trajectory, I craft content that informs, connects, and inspires. Outside of writing, I’m a curious traveler, a movie enthusiast, and someone who’s always eager to explore new ideas - on the page and beyond.

    Read more about Archisha Mondal

    Loading more news...