Crypto Coalition Argues Staking Should Be Exempt from SEC Regulation

The Crypto Council for Innovation (CCI) is advocating to the U.S. Securities and Exchange Commission (SEC) that staking should not fall under its regulatory jurisdiction. Key points include:

• The CCI comprises various stakeholders, including Kraken, a16z, Lido, Galaxy, Figment, Polychain, and Paradigm.
• In a letter to the SEC's crypto task force, the group argues that the rationale behind exempting "proof-of-work" mining from regulation should also apply to staking.
• The letter states that stakers earn rewards based on protocol-defined outcomes, similar to miners, rather than through managerial actions.
• Staking involves locking coins to support blockchain operations, which the CCI claims provides valuable technical services rather than passive investment gains.
• The SEC has previously targeted staking operations, such as Kraken's settlement and other enforcement actions.
• CCI requests guidance from the SEC akin to what has been provided for memecoins and stablecoins, emphasizing a need for clear regulatory boundaries.
• Some state regulators are actively pursuing staking enforcement actions, highlighting the necessity for federal guidance.
• New SEC Chairman Paul Atkins expressed openness to re-evaluating the agency's approach to cryptocurrency businesses.
• U.S. senators have also urged the SEC to reconsider its stance on staking in exchange-traded funds.