This new guide provides greater clarity on staking activities for individual investors, while increasing regulatory obligations for platforms that offer staking services. Investors are advised to carefully review the SEC registration status and disclosure documents of platforms from which they intend to receive staking services.

Will Staking Activities Be Considered a Security?

In a statement made by the SEC’s Corporate Finance Division, it was stated that individuals using their own crypto assets to act as validators in PoS networks and the rewards they earn in this process do not require registration under federal securities laws. Such activities are not considered investment contracts or securities, because the rewards obtained are seen as a result of the participant’s own technical contributions rather than the entrepreneurial or managerial efforts of others.

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The Situation is More Complicated for Staking Service Providers

However, the situation is different for third-party platforms that offer staking services. In particular, if users entrust their crypto assets to these platforms and perform staking transactions, the SEC may consider these services as securities offerings. Therefore, platforms that offer staking services are required to provide full, fair and accurate information to investors and complete the necessary registration processes.

Some staking services automatically re-stake the rewards that users earn. The SEC states that such transactions may also be considered under securities laws. Therefore, it is important for platforms that offer staking services to carefully evaluate the scope of the services they offer and the level of control users have over their assets.

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