SEC’s Shocking Staking Revelation: Not a Security? You Won’t Believe This!

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So, the SEC’s Division of Corporation Finance has decided to grace us with their wisdom: defined protocol staking on proof-of-stake networks? Not a security. Who knew? 🙄

SEC Staff Clarifies Protocol Staking Not a Security for Covered Crypto Assets on PoS Network

On May 29, the U.S. Securities and Exchange Commission’s Division of Corporation Finance issued a statement that’s about as exciting as watching paint dry. They concluded that certain protocol staking arrangements on proof-of-stake (PoS) networks don’t count as securities offerings under federal law. Because, you know, we all needed that clarification. 🙃

They’re talking about “Covered Crypto Assets”—tokens that are apparently essential for PoS networks to function. It’s like saying, “Hey, you need these tokens to keep the lights on!” But wait, there’s more! They based this conclusion on the Howey test, which sounds like a fancy name for a game show where you guess if something is an investment contract. Spoiler alert: it’s not! 🎉

The Division’s staff had the audacity to state:

It is the Division’s view that ‘Protocol Staking Activities’ … do not involve the offer and sale of securities.

And they went on to say: “Participants in Protocol Staking Activities don’t need to register with the Commission under the Securities Act.” So, if you’re staking, you’re off the hook! No registration, no problem! It’s like a free pass to the amusement park, but without the fun rides. 🎢

Now, “Protocol Staking Activities” include: (1) staking Covered Crypto Assets on a PoS network, (2) services from third parties like node operators and custodians, and (3) all those lovely ancillary services. You know, the ones that sound important but are really just administrative fluff. They found these activities to be more like filing paperwork than running a hedge fund. Who knew? 🤷‍♂️

They also mentioned three types of staking: self (or solo) staking, self-custodial staking with a third party, and custodial arrangements where a third party stakes on your behalf. But don’t get too excited! Their views don’t cover liquid staking or any arrangement where a custodian decides how much to stake. Because, of course, that would be too easy! 😅

While this statement is just the staff’s opinion and has no legal weight, it’s a big deal for crypto folks. Skeptics warn that this could change, especially if staking gets more complicated. But hey, advocates of decentralized tech are thrilled that the SEC finally acknowledged that standard protocol staking is more about infrastructure than investing. It’s like saying, “Congratulations, you’re not a security! Now go build something!” 🏗️

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2025-05-30 05:27