7 December 2025
The U.S. Securities and Exchange Commission (SEC) is facing mounting criticism from both current and former officials over its changing stance on crypto staking services.
On May 29, the SEC’s Division of Corporation Finance published new guidance regarding crypto staking services. The guidance stated that certain offerings may not constitute securities, exempting proof-of-stake blockchains from registration requirements under the Securities Act under certain conditions.
However, according to John Reed Stark, former chief of Internet Enforcement at the SEC, this new interpretation may conflict with several federal court rulings. Stark points out that the SEC’s recent moves contrast with court decisions in high-profile cases against crypto exchanges like Binance and Coinbase, where judges previously ruled that staking products could be categorized as securities under established legal precedents.
“This is how the SEC is going to die — in plain sight,” said Stark, who described the shift as “a shameful rejection of its mission to protect investors.”
In the case of Binance, the SEC initially alleged that the exchange’s staking services constituted unregistered securities offerings, but the case was dismissed in its entirety in May 2025, preventing the SEC from bringing similar claims. Similarly, a federal judge allowed the case against Coinbase to proceed in March 2024, finding that the SEC had sufficiently shown that the staking program constituted an unregistered offer and sale of securities. However, that case was also dismissed in February 2025, amid a broader shift in the SEC’s regulatory approach to crypto.
Sitting Commissioner Caroline Crenshaw issued a statement on May 29 addressing the SEC’s approach to crypto staking, warning that the staff’s conclusions were not consistent with established case law or the Howey test, which serves as a benchmark for classifying securities.
“The staff’s analysis may reflect what some wish the law were, but it does not align with the court decisions on strikes and the long-running Howey precedents on which they are based,” Crenshaw wrote, adding: “This is yet another example of the SEC’s ongoing ‘fake it till we make it’ approach to crypto – taking actions based on the anticipation of future change while ignoring existing law.”
The Commission has recently taken a series of deregulatory steps regarding digital assets, including closing investigations, withdrawing lawsuits and hosting roundtables with industry participants on regulation.
“This crypto deregulation blitzkrieg,” Stark wrote, “has destroyed a once-proud 90-year legacy.”
While the SEC is positioning its recent actions as an attempt to provide regulatory clarity, critics argue that they have led to even more confusion. On June 2, Crenshaw questioned how consistent the commission's approach really is, citing examples where the SEC has ruled against certain digital assets, such as ether (ETH) and Solana (SOL), as effects seemed to be considered.
“How can these crypto assets supposedly not be securities for the purposes of registration requirements, but coincidentally they are if a registrant sees an opportunity to sell a new product?” Crenshaw asked.
Speaking at the Bitcoin 2025 conference in Las Vegas, Commissioner Hester Peirce defended the SEC’s new approach to crypto, emphasizing that the classification of a securities transaction depends more on the nature of the transaction than the asset itself: “Most crypto assets, as we see them today, are probably not themselves securities. That doesn’t mean you can’t sell a token that isn’t itself a security in a transaction that is a securities transaction. That’s where we really need to provide some guidance.”
What are crypto staking services?
Crypto staking services allow users to lock their digital assets into a blockchain network to verify transactions and earn rewards, usually in the form of new tokens. This process is often done in a proof-of-stake system, where validators are chosen based on the number of tokens they have staked.
Why is the SEC critical of crypto staking?
The SEC is concerned that staking services in many cases may be classified as securities, which means they must meet strict registration requirements. The SEC aims to ensure investor protection and prevent undue risk or deception from occurring in the market.
How does the new directive impact the future of crypto regulation?
The SEC’s new guidance could lead to increased legal uncertainty for staking services and their users. It could also affect the development of new products and services in the crypto space, given the confusion created by conflicting interpretations of existing law.
Bitcoin (BTC)
Ethereum (ETH)
XRP (XRP)
