Nearly 30 crypto advocacy groups, led by the Crypto Council for Innovation (CCI) and its Proof of Stake Alliance (POSA), are calling on the Securities and Exchange Commission (SEC) to issue clear regulatory guidance on staking — a foundational component of decentralized finance (DeFi) and blockchain infrastructure.
Staking: Not an Investment, But a Technical Process
In an April 30 letter to SEC Commissioner Hester Peirce, the groups argued that staking is not an investment contract, as defined by the Howey Test, because:
- Users retain ownership of their staked assets.
- Blockchain protocols, not staking providers, determine the reward mechanics.
- Staking services do not depend on the managerial efforts of others, unlike securities.
“Staking isn’t niche — it’s the backbone of the decentralized internet,” the coalition wrote.
Call for Principles-Based Guidance
The letter urges the SEC to:
- Support staking in exchange-traded products (ETPs).
- Avoid overly strict rules that could “freeze market structures” and stifle innovation.
- Provide principles-based guidance, similar to past proof-of-work mining guidance.
“We’ve seen more constructive dialogue in 4 months than in 4 years,” the group said, signaling a shift in tone with the SEC under the current administration.
Why It Matters: SEC’s Stance Could Shape the Future of DeFi
The coalition warned that:
- Applying traditional securities disclosure rules to staking is inappropriate, given its technical nature.
- A misclassification could hamper innovation in staking, delay ETF approvals, and disrupt institutional adoption.
Major Players Back the Initiative
Members of the POSA coalition include:
- Andreessen Horowitz (a16z)
- Consensys
- Kraken, which recently restored staking services in the U.S.
So far, the SEC has:
- Not approved any staking-enabled crypto ETFs.
- Delayed a decision on Grayscale’s ETH ETF staking feature (as of April 14).
Bloomberg analyst James Seyffart expects a decision on an Ether staking ETF as early as May.
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