On May 29, 2025, staff in the SEC’s Division of Corporation Finance issued a statement on “Certain Protocol Staking Activities.” For certain “staking” activities on blockchain networks that use proof-of-stake (“PoS”) as a consensus mechanism (“PoS Networks”), the SEC staff is of the view that such activities do not involve the offer and sale of securities under the SEC’s Howey test.
The SEC staff’s views apply only to the following Protocol Staking activities and transactions (each a “Protocol Staking Activity”):
- staking Covered Crypto Assets on a PoS Network;
- the activities undertaken by third parties involved in the Protocol Staking process—including, but not limited to, third-party Node Operators, Validators, Custodians, Delegates and Nominators (“Service Providers”)—including their roles in connection with the earning and distribution of rewards; and
- providing certain ancillary services that are administrative or ministerial in nature.
Additionally, the SEC staff’s views are limited only to Protocol Staking Activities undertaken in connection with the following types of Protocol Staking:
- Self (or Solo) Staking, which involves a Node Operator staking Covered Crypto Assets it owns and controls using its own resources. The Node Operator may include one or more persons acting together to operate a node and stake their Covered Crypto Assets.
- Self-Custodial Staking Directly With a Third Party, which involves a Node Operator, under the terms of the protocol, being granted the validation rights of owner(s) of Covered Crypto Assets. Reward payments may flow from the PoS Network directly to the Covered Crypto Asset owners or indirectly to them through the Node Operator.
- Custodial Arrangements, which involve a Custodian staking on behalf of the owners of the Covered Crypto Assets that the Custodian holds on their behalf. For example, a crypto asset trading platform holding deposited Covered Crypto Assets for its customers may stake such Covered Crypto Assets on behalf of such customers on a PoS Network that permits delegation on behalf of and with the consent of customers. The Custodian will stake the deposited Covered Crypto Assets using its own node or select a third-party Node Operator. In the latter case, this selection is the Custodian’s only decision in the staking process.
Commissioner Peirce issued a statement on this topic, as did Commissioner Crenshaw.