Introduction: A Revolutionary Way to Stake Crypto
In the most recent news worthy of the crypto world, the United States Securities and Exchange Commission (SEC) has finally had a say on cryptocurrency staking. In its most recent statement, the STC, the Protocol Staking Activities are not classified in any way as securities transactions, which is an outstanding victory of blockchain projects and staking-as-a-service providers.
This statement may transform the interaction between U.S-based platforms and users with Proof-of-Stake (PoS) networks, which may open greater participation without fear of the regulation.
What SEC Said About Staking
As was made known in the statement by the SEC Division of Corporate Finance on May 30:
In the opinion of the Division, the activities known as Protocol Staking Activities (the Activities) of determining the parameters of protocols and their subsequent participation (the Protocol Staking) in the operation of a specific protocol do not imply the proposal and sale of securities, as such.
According to the new latitude and longitude, those who engage in such are not obliged in registering transactions under the Securities Act. Which implies that there will be no necessity to use exemptions or legal loopholes but a simple green light.
These are called the following Protocol Staking Activities:
- Staking on Proof-of-Stake networks
- Staking with third parties
- Engaging in side activities in staking services
Read SEC official site announcement here
Commissioner Responses: Two Opinions, A Tale of Two Views
It is Supported by Hester Peirce
The new guidelines were commended by SEC Commissioner Hester Peirce known as crypto-friendly:
The statement is a relief to stakeholders and staking-as-a-service providers in the United States today.
She pointed out how the uncertainty back in the days had restricted such participation and to the extent of negativity on the decentralization of PoS systems.
Caroline Crenshaw Mographs It
Commissioner Caroline Crenshaw on the contrary was not impressed. She condemned this action of the SEC by saying:
That is just another manifestation of how the SEC has been playing a game of pretending until they actually have something in crypto…”
She presented her case by saying that these statements avoid legal realities and simply cause more harm than good.
What This Means to the Crypto Industry
The consequence of such a decision might be dramatic on the staking market in the U.S.:
- Simplified staking service provider onboarding
- Easy onboarding of staking service providers
- Facilitates decentralization by lowering the number of legal barriers
- Possibility of more institutional activity in PoS chains
- The clarity of law has the potential to infuse innovation on blockchain platforms
It is also possible that this guidance will minimize the legal risks of companies such as Coinbase, Kraken, and Binance US, which have been scrutinized on staking programs.
Conclusion: Step In the Right or Wrong Direction?
Though Peirce regards it as a step in the direction of responsible innovation, Crenshaw is afraid that this way the general population will be deceived. Nevertheless, the majority of crypto enthusiasts will probably accept this clarity, which will make the process of staking in the U.S. less clouded by the regulatory aspects.
As usual, the actual implementation will come down to enforcement and any changes to the legislation, but in the moment, it is a massive success of staking economy.