In a nutshell
- A coalition of leading crypto firms, pushed by the Crypto Council for Innovation and the Proof of Stake Alliance (POSA), requests the SEC to declare crypto staking as an activity separate from securities regulations.
- In an open appeal, they argue that staking is a technical process for securing blockchain networks, not an investment strategy.
- TheSEC is asked to align with past SEC positions on mining, stablecoins, memecoins, and issue a clear statement on staking.
- The coalition also proposes industry standards for transparency and user control in staking services.
The SCENE: Crypto Stakeout
Cryptocurrency Sector Urges SEC to Clarify Regulations Concerning Staking Practices
A group of major crypto companies is attempting to convince the U.S. Securities and Exchange Commission (SEC) to acknowledge that crypto staking and associated services lie outside of securities regulations.
In an appeal sent Wednesday to the SEC Crypto Task Force, the Crypto Council for Innovation and its subsidiary, the POSA, assert that staking is not an investment game.
Crypto staking is a mechanism used in proof-of-stake (PoS) blockchains, whereby users contribute their tokens to help verify transactions and secure the network, while earning rewards in return.
Driven by corporations such as Consensys, Kraken, Ava Labs, and Galaxy, the Gang Wars for crypto-domination beckons [1], seeking to establish that the USA will embrace innovation by getting the SEC to issue a public statement supporting its stance.
"The mission is simple: principles-based guidance for staking and staking services, identical to the SEC's recent statement on proof-of-work mining," the council announced.
"The aim is to safeguard users while assisting the development of the staking industry, an essential component of PoS blockchain networks," they added.
Speak with Clarity
The appeal comes as the SEC's Crypto Task Force strives to bring transparency to the digital assets industry. Under the previous Chair, Gary Gensler, the agency encountered accusations of overreach from the crypto community.
A change in leadership with the recent appointment of Paul Atkins as head of the SEC and a pro-crypto government under Trump has shifted the tone. Atkins has distanced himself from the previous SEC regime, which he depicted as inhibiting innovation [2].
The SEC has stepped back from pursuing numerous high-profile cases against cryptocurrency companies and launched a series of discussions [3].
The Crypto Council's appeal also sets out guidelines for staking service providers, including clear disclosures to users, transparency surrounding reward distribution, and preserving user control over staked assets.
Updated by Sebastian Sinclair
Today's Insights
Recent changes at the SEC may signal a shift in the regulatory landscape for crypto staking. Given the SEC's ambiguous stance on staking's classification, advocacy efforts such as the CCI's are crucial for correct interpretation of staking as a technical process, not an investment approach. The hope is that the SEC's upcoming decisions on ETFs involving Ethereum staking [4] could provide further clarity on the agency's stance.
[1] https://www.cci.co/press/crypto-council-for-innovation-and-proof-of-stake-alliance-call-on-sec-to-clarify-that-staking-is-not-an-investment-activity
[2] https://coindesk.com/us-securities-regulator-intends-to-distance-itself-from-past-crypto-policy-stance-under-chief-regulator-paul-atkins
[3] https://www.coindesk.com/policy/2023/02/23/what-to-expect-when-youre-expecting-cryptocurrency-regulatory-clarity-from-the-sec/
[4] https://www.sec.gov/news/public-statement/statement-division-investment-management-crypto-assets-and-etfs
[5] https://www.coindesk.com/policy/2023/02/23/cryptocurrency-staking-just-got-a-bigger-boost-from-sec-chairman-gary-gensler/
Daily Debrief Newsletter
- The Crypto Council for Innovation and the Proof of Stake Alliance (POSA) has asked the SEC to recognize crypto staking as a separate activity from securities regulations.
- In their appeal, the coalition argues that staking is a technical process for securing blockchain networks, not an investment strategy.
- The SEC is encouraged to align with its past positions on mining, stablecoins, memecoins, and issue a clear statement on staking.
- The coalition also proposes industry standards for transparency and user control in staking services.
- Companies such as Consensys, Kraken, Ava Labs, and Galaxy are driving this push for the SEC to acknowledge the separate nature of crypto staking.
- The aim is to safeguard users while assisting the development of the staking industry, an essential component of Proof of Stake (PoS) blockchain networks.
- The SEC's recent shift in leadership and tone under Paul Atkins and a pro-crypto government under Trump may signal a change in the regulatory landscape for crypto staking.
- The Crypto Council's appeal also outlines guidelines for staking service providers, including clear disclosures to users, transparency surrounding reward distribution, and preserving user control over staked assets.
- The hope is that the SEC's upcoming decisions on ETFs involving Ethereum staking could provide further clarity on the agency's stance, potentially leading to a more favorable regulatory environment for crypto staking.
