Industry Seeks Equivalent Treatment to Mining Operations
A coalition of US blockchain companies, led by the Crypto Council for Innovation, has formally requested that the Securities and Exchange Commission (SEC) provide explicit regulatory guidance on cryptocurrency staking operations. In an open letter dated April 30, the group urged the SEC to apply the same regulatory clarity to proof-of-stake validation that it recently granted to proof-of-work mining. The coalition’s request highlights the growing tension between emerging blockchain technologies and existing regulatory frameworks as the industry seeks to establish clearer operational boundaries.
Parallel Treatment: Mining vs. Staking
The Council’s appeal is grounded in a significant regulatory precedent: the SEC Division of Corporation Finance’s March 2025 statement that established proof-of-work mining on decentralized networks does not constitute a securities transaction. Industry advocates argue this same reasoning should naturally extend to staking activities.
“The benefits of staking to a PoS network and its participants are clear: base layer actors are incentivized to contribute to the security of the network, minimize the risk of manipulative activity, ensure data integrity, and bolster community trust in the network,” the Council stated in its letter.
This argument hinges on the functional similarities between mining and staking – both activities serve essential network maintenance purposes rather than representing investment contracts. Stakers, like miners, validate transactions, secure networks, and facilitate the production of new blocks, receiving protocol-defined rewards for these services without relying on centralized management or profit-sharing arrangements.
ETF Implications and Market Development
The timing of this appeal is particularly significant given the recent expansion of cryptocurrency ETFs in the United States. The Council emphasized that regulatory clarity would remove uncertainties for platforms offering staking services, especially those connected to exchange-traded funds.
“Without clear guidelines, ETF issuers face uncertainty about whether incorporating staking features could trigger securities regulations that would complicate their offerings,” notes James Wilson, a financial regulatory analyst. “This ambiguity potentially puts US-based products at a competitive disadvantage in the global market.”
Several ETF providers, including Franklin Templeton and Fidelity, have already filed for staking-enabled Ethereum ETFs, but these applications remain in regulatory limbo. Clear SEC guidance could potentially accelerate these approvals and foster further product innovation.
Global Competitive Considerations
The Council’s letter also emphasized the need for regulatory clarity to maintain US competitiveness in the rapidly evolving digital asset landscape. Other jurisdictions, including Singapore, the UK, and the European Union, have begun establishing more defined frameworks for staking activities.
“The US risks falling behind other global financial centers if it fails to provide timely guidance on staking operations,” says Sarah Johnson, director of blockchain policy research at a Washington DC think tank. “Regulatory certainty is becoming a competitive advantage in attracting blockchain innovation and investment.”
The potential for regulatory arbitrage – where companies relocate to jurisdictions with clearer rules – remains a significant concern for US policymakers and industry stakeholders alike. This appeal represents another chapter in the ongoing dialogue about balancing innovation with investor protection in emerging financial technologies.
Technical vs. Financial Considerations
A core argument presented by the Council centers on the fundamental nature of staking as a technical rather than financial activity. While the letter acknowledged certain risks, such as slashing (where stakers lose tokens for violating protocol rules), it emphasized that such occurrences are uncommon and not characteristic of staking’s economic model.
The distinction between technical network participation and investment contracts has significant implications for how staking is regulated. The Council maintains that staking activities, by their nature, do not meet the criteria for securities under the Howey test – the Supreme Court standard used to identify investment contracts.
As the SEC considers this industry appeal, its response will likely establish an important precedent for how proof-of-stake mechanisms are treated under US securities law, potentially shaping the future development of blockchain technology and associated financial products in the United States.