The U.S. Securities and Exchange Commission (SEC) has issued new guidance on cryptocurrency staking that has created a significant rift within the agency while simultaneously being hailed as a victory by the crypto industry. The guidance, released on May 29, 2025, states that certain “Protocol Staking Activities” on proof-of-stake blockchains don’t require registration under the Securities Act 1 2.
Internal SEC Conflict
The new stance has exposed deep divisions within the SEC itself. Commissioner Hester Peirce, who leads the agency’s Crypto Task Force, welcomed the guidance as providing “clarity for stakers and staking-as-a-service providers in the United States” 3. She noted that previous regulatory uncertainty had “discouraged Americans from participating in staking for fear of violating securities laws,” which ultimately “undermined the decentralization, censorship resistance, and credible neutrality of proof-of-stake blockchains” 3.
In stark contrast, Caroline Crenshaw, the SEC’s sole Democratic commissioner, has strongly criticized the new approach. She argues that the guidance “fails to deliver a reliable roadmap for determining whether a staking service” qualifies as an investment contract under securities laws 4 3. Crenshaw didn’t mince words, describing the SEC’s approach as “fake it till we make it” – taking action based on anticipated future changes while ignoring existing law 3.
Former SEC chief of Internet Enforcement John Reed Stark has also voiced strong opposition, claiming the new interpretation contradicts federal court rulings in cases against major exchanges like Binance and Coinbase, where judges previously allowed allegations that staking products qualified as securities.
Industry Reaction
The crypto industry has largely celebrated the SEC’s new position. Alison Mangiero, head of staking policy at the Crypto Council for Innovation, called it a “major step forward” for the U.S. cryptocurrency industry 2. She emphasized that “the SEC has now recognized what we’ve long argued: Staking is a core part of how modern blockchains operate, not an investment contract” 2.
This guidance comes after significant advocacy from the industry. In April, the Crypto Council for Innovation’s Proof of Stake Alliance project led nearly 30 organizations in submitting a detailed letter to the SEC’s Crypto Task Force, arguing that staking service providers are “distinct from investment contracts” 2.
Broader Regulatory Shift
The staking guidance appears to be part of a larger deregulatory approach to digital assets by the SEC, which has recently included closing investigations, dropping lawsuits, and engaging with industry participants through roundtables.
Commissioner Peirce has defended the agency’s evolving stance, noting at the Bitcoin 2025 conference in Las Vegas that the classification of a securities transaction depends more on the nature of the deal than the asset itself. She stated, “Most crypto assets, as we see them today, are probably not themselves securities. That doesn’t mean that you can’t sell a token that is not itself a security in a transaction that is a securities transaction.”
The industry is now watching closely to see how this guidance might affect pending decisions on Ether staking ETFs. On May 21, the SEC delayed its decision on Bitwise’s application to add staking to its Ether ETF, along with its decision on Grayscale’s XRP ETF 2.
What This Means for Investors
For crypto investors and participants in staking activities, this guidance potentially removes a significant regulatory hurdle. The clarification that certain staking activities don’t constitute securities offerings could encourage more participation in proof-of-stake networks and potentially lead to greater innovation in the space.
However, the internal disagreement at the SEC suggests that this position could be subject to change, especially if there are shifts in the agency’s leadership or political direction.
