With more than $193 billion in digital assets currently staked, it remains uncertain in the U.S. whether staking services fall under the definition of securities.

The previous SEC administration had imposed sanctions on major exchanges such as Kraken, Coinbase, and Consensys due to their staking services. However, the current administration has withdrawn most of these enforcement actions.

Everstake: Users Always Maintain Asset Control

During the meeting, Everstake stated that non-custodial staking is a technical process, not an investment product. According to the company, users do not lose control of their assets during the staking process and do not transfer ownership to any third party.

The company argued that this model does not technically involve an investment contract but is instead a blockchain infrastructure mechanism. Company founder Sergii Vasylchuk said:

“Staking is not a financial instrument or a securities transaction. It is a fundamental protocol mechanism that ensures the functioning of decentralized networks.”

Regulatory Uncertainty Must End

In a letter submitted to the SEC’s Crypto Task Force on April 8, 2025, Everstake requested regulatory clarity for non-custodial staking, as well as custodial and liquid staking models.

The company emphasized that in this staking model, users retain custody of their assets, no funds are pooled, and there is no expectation of profit based on managerial efforts.

In Everstake’s system, users delegate only validation rights, while maintaining full ownership of their tokens. Rewards are distributed algorithmically by the blockchain network itself.

Non-Custodial Staking Does Not Pass the Howey Test

The letter also highlighted that the staking process does not meet any element of the Howey Test. Users do not invest in a common enterprise, do not expect profits from the company’s efforts, and are not dependent on company management for financial results.

Rewards stem solely from network-level incentives and fluctuate with market conditions.

Everstake also proposed some core criteria for excluding non-custodial staking from securities classification:

• User asset control

• No pooled funds

• Permissionless withdrawal

• Provision of technical services only

The company likens non-custodial staking to proof-of-work mining, which the SEC has previously not classified as a securities transaction.

Innovation at Risk Without Clarity

According to the company’s Chief Legal Officer, Margaret Rosenfeld, there is no asset handover, investment contract, or third-party risk in the non-custodial staking process. Therefore, subjecting it to securities regulation could threaten the development of decentralized technologies:

“Treating this model as a security would severely hinder innovation in the blockchain space.”

However, no definitive regulatory commitment has been made by the SEC so far. Rosenfeld stated that while the agency did not provide any guarantees, it continues to listen to industry stakeholders.

Also, you can freely share your thoughts and comments about the topic in the comment section. Additionally, don’t forget to follow us on our Telegram  ,YouTube and Twitter channels for the latest news and updates.

The post Everstake: “Non-Custodial Staking Is Not a Security, But a Technical Process” appeared first on Coin Engineer.

You might like: Another exchange has started withdrawals for its customers!

Proposal 868, submitted by Stakelab, a contributor to Cosmos, aimed to reduce inflationary pressures on the ATOM token, especially in scenarios where a significant portion of the coins are bonded.

Despite the potential benefits highlighted by the proposal owner, such as reducing the inflation rate if the total bond token supply increases, concerns were raised about the implications of reducing the inflation rate to zero, particularly its impact on the security of the Hub.

The Hub acts as the central hub of the Cosmos Ecosystem, facilitating communication and interoperability between the many blockchains built on Cosmos. ATOM is the native token of the Hub, used for transaction fees, security, and governance.

Vote Results (Cosmos)

48.6% of validators voted against the proposal, 25% supported it, and 25.9% abstained.

Notable validators with significant voting power who voted against the proposal included Everstake, Cosmostation, Chorus One, Allnodes, Stake.fish, Swish Staking, Forbole, Provalidator, Keplr, and others.

Validators who supported the proposal included Game, Informal, Stakecito, P2P, Polkachu, Pryzm, IrisNet, Leap, and many others.

This latest proposal came after the accepted Proposal 848, which set a limit of 10% on the maximum inflation rate to regulate token emissions, down from the previous 20%.

In Cosmos, validators vote as well as provide staking power, and voters can delegate their stake to them.

The inflation rate on the Cosmos Hub had been a major point of discussion in 2023. Some contributors to Cosmos want it to be as minimal as possible, believing that this optimizes fresh emissions.

The post Cosmos Rejects Atom Inflation Reduction appeared first on Coin Engineer.