SEC Says PoS Staking Isn't a Securities Transaction - $SOL Staking ETFs Next?

On May 29, 2025, the U.S. Securities and Exchange Commission (SEC) issued a statement clarifying its position on certain staking activities within Proof of Stake (PoS) blockchain networks. The SEC's Division of Corporation Finance provided guidance on when such activities do not constitute securities transactions under federal securities laws.

The Division has clarified that it does not consider staking to involve the offer and sale of securities under existing securities laws. As a result, participants do not need to register with the SEC before engaging in certain activities related to staking crypto assets on proof-of-stake networks.

The crypto community received the long-awaited clarification well and viewed it as a significant win for decentralization and the regulation of digital assets.

What Activities Are Covered by This Statement?

The Division’s position applies to specific types of staking activities and transactions. These include:

• Staking Covered Crypto Assets on a Proof of Stake (PoS) network

• Actions carried out by third-party participants in the staking process, such as Node Operators, Validators, Custodians, Delegates, and Nominators (“Service Providers”), particularly concerning earning and distributing rewards

• Providing related support services, including the provision of slashing coverage, allowing crypto assets to be returned to a staker before the end of the protocol’s unstaking period, etc.

This guidance covers three types of Staking Activities: Self-Staking, where a Node Operator stakes its assets using its infrastructure; Self-Custodial Staking with a Third Party; and Custodial Arrangements, where a custodian (e.g., a trading platform) stakes assets on behalf of customers. The Division’s view is limited to these models and the activities conducted within them.

The “Howey Test”

In both the Securities Act and the Exchange Act, the word “security” is defined by providing a list of financial instruments, including “stock” and “bond”. Crypto assets are not explicitly mentioned in this list, so the Commission analyzes certain staking transactions under the “investment contract” test outlined in ‘SEC v. W.J. Howey Co.’ case, also known as the “Howey Test.”

The Howey test is used to evaluate arrangements or instruments that are not explicitly defined as securities, focusing instead on their underlying economic realities. It is used to determine whether an instrument qualifies as an investment contract.

Differing Views Within the SEC

The statement from the Division of Corporation Finance prompted divergent responses from SEC Commissioners Hester M. Peirce and Caroline A. Crenshaw, reflecting contrasting views on the regulatory treatment of crypto staking.

Commissioner Peirce welcomed the Division's statement, viewing it as a positive step toward regulatory clarity for participants in proof-of-stake (PoS) networks. She emphasized that the guidance would alleviate uncertainties that have discouraged Americans from engaging in staking, thereby supporting decentralization and the integrity of blockchain networks.

In contrast, Commissioner Crenshaw expressed concern that the Division's statement conflicts with established legal principles, particularly the Howey test, which determines what constitutes an investment contract. She noted that the SEC has previously alleged, and courts have upheld, that certain staking-as-a-service programs qualify as investment contracts. Crenshaw cautioned that the new guidance might undermine investor protections by creating ambiguity about the applicability of securities laws to staking activities. She emphasized the need for consistent application of legal standards to ensure that investors are adequately protected.

How This Might Impact Staking ETF Applications

The first Spot SOL ETFs were recently launched in Canada after the Ontario Securities Commission granted approval to as many as four Canadian firms. These ETFs incorporated staking and experienced $120 million CAD in inflows during their first week. Their debut naturally raised the question of when similar ETFs might launch in the United States.

Last week, Canary Capital filed the first U.S. Solana Staking ETF, naming Marinade Finance as its exclusive staking partner. The SEC’s clarification that native protocol staking isn’t inherently a securities transaction provides solid regulatory footing for Canary Capital’s Solana Staking ETF, strengthening the case for its approval.

Numerous X Users have expressed positive sentiments about this clarification from the SEC. Former Fox Business Journalist, Eleanor Terrett, highlighted how this statement “is a big deal for ETF providers who want to offer staking.”

Rebecca Rettig, Chief Legal Officer at Jito Labs, affirmed that the SEC’s statement does, in fact, allow ETFs to include staking.

“This bodes very well for other types of non-custodial staking activity, including liquid staking”, she remarked.

No doubt, ETF providers can breathe a sigh of relief as a significant regulatory hurdle appears to have been removed from their path to incorporating staking into their offerings.

Implications for the Crypto Industry

This clarification offers a more defined regulatory framework for participants in proof-of-stake (PoS) networks, drawing a clear line between decentralized staking activities and those that involve intermediaries. By outlining what qualifies as a securities transaction in the context of staking, the SEC aims to support both compliance and continued innovation within the crypto ecosystem.

In light of this clarification, other ETF issuers may update their filings to include staking as the decision deadline approaches. This development could open the door for more staking-related products to enter the market under a clearer regulatory framework.

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