A coalition of nearly 30 U.S. crypto organisations is pushing regulators to define staking’s legal future and the outcome could reshape the digital economy.
Led by the Crypto Council for Innovation (CCI) and its Proof of Stake Alliance (POSA), the groups sent an urgent letter to the SEC in April 2025. They argue that staking, a process of securing blockchain networks, is a technical function, not a financial investment. With billions in crypto assets locked in staking globally, clarity could determine whether the U.S. leads or lags in the blockchain revolution.
Crypto Coalition Challenges SEC’s Staking Stance
The coalition, including heavyweights like Kraken, Andreessen Horowitz, and Lido, insists staking lacks key traits of traditional securities. Unlike stocks or bonds, stakers retain asset ownership and earn rewards through automated protocols, not managerial decisions. “Staking isn’t niche it’s the backbone of the decentralised internet,” the letter stated.
The SEC has delayed decisions on staking-enabled ETFs, Greyscale Grayscale’s spot Ether fund. Analysts speculate approvals could arrive by May 2025, but regulators remain cautious. The groups now demand guidelines mirroring recent SEC statements on proof-of-work mining, which escaped securities classification.
Technical Process vs. Investment Contract
Central to the debate is the Howey Test, a legal benchmark for defining securities. The coalition claims staking fails this test because rewards depend on blockchain protocols, not a provider’s efforts. “Stakers aren’t passive investors,” the letter emphasised. “They’re active network participants.”
By contrast, the SEC has previously targeted staking services, like Coinbase’s program, labelling them unregistered securities. In 2023, Kraken paid $30 million to settle similar charges. Critics argue these enforcement actions muddy the waters. “Regulation by lawsuit stifles innovation,” said SEC Commissioner Hester Peirce, a known crypto advocate.
State Regulators Compound Uncertainty
Complicating matters, state agencies are pursuing their own staking crackdowns. The coalition warns fragmented rules could drive firms offshore. For instance, Texas recently fined a local staking platform, sparking industry backlash.
Federal guidance could harmonise standards, the letter notes. Clear rules would also help startups navigate compliance. “Without direction, small players risk extinction,” said a Figment representative. Furthermore, Ethereum’s shift to proof-of-stake in 2022 amplified pressure for updated policies.
Political Heavyweights Back Industry Push
Bipartisan lawmakers, including Senator Cynthia Lummis, urge the SEC to rethink its approach. In February 2025, Lummis called staking “integral” to blockchain security, criticising ETF restrictions. Even SEC insiders acknowledge missteps. “We need dialogue, not deadlines,” said Commissioner Peirce during a March forum.
Industry leaders echo this sentiment. Coinbase CEO Brian Armstrong warned vague rules could “export innovation” to rival hubs like Singapore. Also, venture firm a16z pledged $50 million to support compliant staking projects, betting on regulatory breakthroughs.
What’s Next for Staking?
The SEC’s Crypto Task Force, relaunched under Peirce in 2025, holds the keys. Tasked with modernising oversight, it has paused enforcement against giants like Binance and Coinbase. Observers say this signals a softer stance under Acting Chair Mark Uyeda.
If the SEC greenlights staking, analysts predict a surge in ETFs and decentralised apps. Conversely, strict rules might consolidate power among large firms. “Clarity will unlock billions in institutional capital,” argued Galaxy Digital’s Mike Novogratz.
Yet risks linger. Overly rigid guidelines could hamper emerging networks like Solana, which rely on staking for security. For now, the industry watches and waits as regulators weigh their next move.
