U.S. Crypto Advocacy Groups Urge SEC to Clarify Staking Rules, Reject Investment Label

A coalition of nearly 30 crypto advocacy groups, led by the Crypto Council for Innovation (CCI) and its Proof of Stake Alliance (POSA), has formally petitioned the U.S. Securities and Exchange Commission (SEC) to provide clear regulatory guidance on crypto staking, arguing that the practice should not be classified as an investment activity under existing securities laws.

In an April 30 letter addressed to SEC Commissioner Hester Peirce, who leads the agency’s Crypto Task Force, the group asserted that staking is a technical function essential to blockchain networks — not a financial contract subject to securities regulation.

“Staking isn’t niche — it’s the backbone of the decentralized internet,” the letter stated.

Industry Pushes for Principles-Based Regulation

The advocacy groups called on the SEC to adopt principles-based guidance for staking, similar to previous staff guidance on proof-of-work mining. They urged the Commission to avoid rigid regulatory frameworks that could stifle innovation or distort evolving market structures.

The letter comes in response to the SEC’s recent request for public input on whether staking and liquid staking — where users lock up cryptocurrency to earn yield — should fall under the agency’s jurisdiction as investment contracts.

The coalition argues that staking fails the Howey Test, a longstanding legal benchmark used to determine whether a transaction qualifies as a security. According to the group, stakers retain ownership of their assets, and rewards are determined by blockchain protocols, not the managerial efforts of a third party.

Key Industry Players Back Staking Clarity

The POSA includes a roster of prominent crypto firms and organizations, including:

Andreessen Horowitz (a16z)

Consensys, the Ethereum development firm

Kraken, a major U.S.-based crypto exchange that resumed staking services earlier this year

These stakeholders argue that the current securities disclosure regime is ill-suited to staking, which they describe as a technological and network-supporting mechanism, rather than a profit-generating investment offered by a centralized entity.

“Blockchain networks set the parameters for staking rewards. Providers don’t deliver profits through managerial discretion like a traditional company,” the groups said.

SEC Delays on Staking ETFs Prompt Further Calls for Clarity

The letter further urged the SEC to support the responsible inclusion of staking features in exchange-traded products (ETPs) — including spot crypto ETFs. The agency has yet to approve any staking-enabled ETF, and recently delayed a decision on whether Grayscale’s spot Ether ETF could incorporate a staking component.

Bloomberg ETF analyst James Seyffart recently forecast that a staking-enabled Ether ETF could be approved by mid-2025, but acknowledged that regulatory uncertainty remains a significant hurdle.

A Shift Toward Collaboration?

Despite past tensions between regulators and the crypto industry, the coalition’s letter struck a more optimistic tone, suggesting that constructive engagement with the SEC has increased under the current administration.

“In the past 4 months, we’ve seen more movement and constructive dialogue with the SEC than in the past 4 years,” the group stated, calling their proposals a “reflection of this new collaborative approach.”

Outlook

With the SEC still weighing how to classify staking and whether to extend ETF permissions to staking-based products, industry voices are growing louder in their call for clear, consistent, and innovation-friendly rules. As the crypto ecosystem expands and more investors engage with staking, the regulatory decisions made in the coming months will likely shape the future of proof-of-stake networks in the U.S. market.

Image source: Shutterstock