Key takeaways
- The U.S. Securities and Exchange Commission (SEC) has reclassified some crypto staking services, easing registration rules and reversing its earlier stance.
- Legal experts and former officials, including John Reed Stark, harshly criticized the shift as inconsistent.
- SEC Commissioner Caroline Crenshaw opposed the guidance, citing conflicts with judicial precedent and accusing the agency of legal overreach.
- The SEC has recently dropped lawsuits and opened dialogue with the crypto industry, signaling a softer regulatory approach.
- The SEC Commissioner Hester Peirce supported the new stance but emphasized the need for clearer rules on crypto asset sales.
The U.S. Securities and Exchange Commission (SEC) is drawing sharp criticism from legal experts and former officials following new guidelines that reclassify some crypto staking services, potentially exempting certain proof-of-stake blockchain offerings from federal securities registration. This latest move marks a significant departure from the agency’s previous enforcement-heavy approach, sparking concerns about regulatory consistency and investor protection.
The New Guidelines Spark Backlash
The SEC’s Division of Corporation Finance issued the new guidelines, suggesting that certain staking products may not qualify as securities. This reinterpretation directly contradicts earlier positions the SEC utilized in enforcement actions against major crypto exchanges, including Binance and Coinbase.
Under the new guidelines, some staking mechanisms — especially those where participants retain full control over their tokens and are not reliant on centralized intermediaries — may not be subject to the same registration and disclosure requirements typically imposed under federal securities laws. This appears to carve out a narrow exemption for non-custodial or protocol-native staking, distancing it from the SEC’s earlier enforcement actions against centralized platforms that offered staking-as-a-service, such as Kraken and Coinbase.
SEC’s crypto staking services reclassified. Source: www.sec.gov/newsroom
Federal judges had previously allowed the SEC’s arguments that staking services could constitute securities under the longstanding Howey Test, a judicial framework for determining whether a transaction qualifies as an investment contract.
John Reed Stark, former head of the SEC’s Office of Internet Enforcement, strongly condemned the new guidance, calling it “a shameful abdication” of the agency’s investor protection duties. Stark emphasized the direct clash with prior judicial rulings, referencing cases where courts accepted the SEC’s classification of staking services as unregistered securities offerings.
While a federal judge allowed the SEC’s case against Coinbase to proceed in March 2024 on these grounds, the case was later dismissed in February 2025, alongside the dismissal with prejudice of the Binance case in May 2025; actions many view as a broader softening of the SEC’s regulatory posture.
Clash Over Legal Interpretation and Direction
Sitting SEC Commissioner Caroline Crenshaw publicly voiced her dissent, asserting that the staff’s analysis deviates from judicial precedent and the Howey framework. “The staff’s analysis may reflect what some wish the law to be,” Crenshaw stated, “but it does not square with the court decisions on staking.”
She described the shift as part of the SEC’s “fake it till we make it” approach, implying the agency is trying to enforce anticipated legal outcomes while disregarding current law. On June 2, Crenshaw further questioned the commission’s internal consistency, citing instances where digital assets like Ether (ETH) and Solana (SOL) were seemingly treated as securities in other contexts.
SEC Trying to Recalibrate Its Crypto Position?
The SEC has recently undertaken a series of actions aimed at recalibrating its stance for the crypto industry, including closing investigations, withdrawing lawsuits, and initiating industry roundtables to discuss digital asset regulation.
While SEC officials frame these efforts as attempts to provide clarity, critics argue they have only deepened uncertainty and damaged the agency’s regulatory credibility.
Conversely, Commissioner Hester Peirce, speaking at the Bitcoin 2025 conference in Las Vegas, defended the agency’s evolving view. “Most crypto assets are probably not themselves securities,” Peirce stated. “But selling them can still involve a securities transaction. That’s where we need better guidance.”
As the SEC navigates the complex landscape of digital asset regulation, the debate over the classification of staking and other crypto assets remains far from settled, leaving market participants grappling with continued regulatory ambiguity.
Read more: SEC Proposes Lighter Frameworks to Support Crypto Market Growth
