I get it—staking has been a rollercoaster. One minute you’re locking up tokens, expecting passive rewards, and the next you’re worrying about whether the SEC will come knocking, calling it an unregistered security. That anxiety has held back innovation. But on May 29, 2025, the SEC’s Division of Corporation Finance stepped in and dropped a game-changer: a clear statement declaring that certain protocol staking activities— including solo staking, delegating your coins while holding custody, and even custodial staking—are not securities.
This isn’t legal fluff. It means staking-as-a-service providers—whether you’re running a pool, offering slashing protection, or bundling early unbonding—can breathe easier. As long as you’re simply facilitating technical functions without taking over managerial control of user funds, the SEC now views your work as administrative or ministerial, not entrepreneurial.
This moment matters. It not only eases compliance pressure but unlocks new possibilities—like staking-enabled ETFs, banks adding staking services, and institutions entering with more confidence. But this guidance isn’t a blanket pass—it draws hard lines around what’s excluded, like liquid staking and discretionary restaking.
In this article, we’ll peel back every layer: what the statement says, what it doesn’t, how it rewrites the rules for staking providers, and what steps you now need to take. No hype—just clear, actionable insight.
Background
Let me take you back.
You remember the Howey Test, right? It’s the cornerstone for determining what counts as an “investment contract.” To figure out if something’s a security, courts ask: is there money put into a common enterprise with a reasonable expectation of profits driven by the efforts of others? Especially the fourth prong: the “efforts of others” part. That’s the hang-up when it comes to staking—if your staking provider is making all the entrepreneurial decisions, you might be stepping into securities territory.
Until recently, that uncertainty was more than theoretical. Back in February 2023, Kraken agreed to a $30 million settlement with the SEC and pulled its U.S. staking services. What pushed the SEC’s hand? Kraken was pooling U.S. customer assets and treating the staking service as an investment offering—classic investment contract behavior.
That wasn’t an isolated case. Coinbase and Binance have also been tangled in SEC scrutiny over similar staking programs. In fact, Coinbase received a Wells notice in 2023 and faced an enforcement push until a lawsuit by the SEC was dismissed in early 2025. Through it all, the SEC under Chair Gensler leaned heavily on enforcement instead of clear rulemaking.
Needless to say, that regulatory cold shoulder chilled innovation—staking providers often felt they were walking on thin ice. Many paused expansion plans rather than risk being labeled unregistered securities issuers.
But then everything shifted on May 29, 2025. That day, the SEC’s Division of Corporation Finance dropped a statement clarifying that protocol staking—under a clearly defined set of conditions—is not a securities transaction.
That shift goes from waters to open air for staking-as-service providers. It’s like the SEC finally told us: You can build here—just don’t step outside the lines.
Key Clarifications from the 2025 Corp Fin Statement
Covered Models
The statement zeroes in on three distinct staking scenarios that are now formally not securities:
Self‑staking: You run your own validator, using your own crypto—totally autonomous.
Self‑custodial staking: You hold your own assets but delegate validation rights to someone else, often a staking-as-a-service operator.
Custodial staking: A third party holds your tokens and stakes them for you, but you remain the legal owner.
The SEC is specific: if you’re acting within these models, and not steering strategy or guaranteeing outcomes, you’re in the clear.
Why It Doesn’t Trigger Howey
The cornerstone is the “efforts of others” prong. The SEC sees staking rewards as flowing from the protocol and your own setup—not from anyone else’s entrepreneurial or managerial work. That’s administration, not business-building.
Solo staking? You’re doing all the heavy lifting.
Delegated staking? The validator just executes your stake, no strategic control.
Custodial? The custodian is your agent—they don’t time the market, pick assets, or promise returns.
In short, none of this initializes an investment contract under Howey.
Ancillary Services Allowed
Here’s the real boost: the SEC says you can offer extra conveniences without crossing regulatory lines. We’re talking:
Slashing coverage: Safeguarding clients from penalties.
Early unbonding: Letting users withdraw before protocol lock-up ends.
Alternate reward schedules: You can pay out early, or adjust payout timing/amounts.
Aggregation: You can pool small stakes to meet protocol minimums.
These are administrative tools—not entrepreneurial gambits.
Limitations & Unaddressed Activities
Liquid Staking & Restaking
Nothing in the SEC’s guidance covers liquid staking—where you stake tokens and receive a derivative token representing that stake in return. Nor does it include restaking, where the same tokens are staked across multiple protocols layered one on another. Both models introduce financial mechanics and counterparty layering that go well beyond what’s administrative or ministerial. These are explicitly excluded from the protected models and remain legally uncertain.
Custodial Discretion and Managerial Control
Custodial staking is included only if the custodian remains a pure agent:
They cannot choose when, how much, or whether tokens are staked.
They must abstain from discretionary adjustments, timing tactics, or yield strategies.
Practical Implications for SaaS Providers
Compliance: Structure, Disclose, and Audit
Asset Ownership & Custody Terms: User agreements must explicitly state that customers retain ownership of their tokens.
Maintain Administrative Role: Validators and custodians must be agents, providing technical execution only.
Careful Language: Avoid phrasing that hints at discretionary decisions.
Full Fee & Risk Disclosures: Clearly communicate fees, risks, and that rewards are not guaranteed.
Legal Audits: Conduct regular reviews to ensure alignment.
New Business Opportunities & Product Playbook
Launch Institutional Offerings: Banks and ETFs now have room to build.
Ancillary Services: Early unbonding, slashing protection, etc., can now be safely built in.
Self-Custodial Market: There’s now clarity for institutional clients who want to retain control of keys.
Risk Management
Avoid liquid or restaking models.
Remove discretionary features.
Monitor private and state-level legal risk.
Stay updated on further SEC or IRS changes.
SEO FAQs
Is custodial staking now legal under SEC rules?
Yes, if custodians remain agents without discretion and users retain full ownership.
What staking services still risk being considered securities?
Liquid staking, restaking, yield optimization layers, and derivative wrappers remain at risk.
Can SaaS providers offer slashing coverage and early unbonding?
Yes—if these services remain non-speculative and administrative.
What steps should providers take to ensure compliance?
Use clean disclosures, restrict discretion, conduct audits, and align with SEC guidance.
How might this impact staking-enabled ETFs or institutional offerings?
This opens the door to ETFs and bank-integrated staking, provided they follow the SEC’s structural boundaries.
Final Thoughts
What you’re witnessing here isn’t just an update—it’s a pivot. The SEC’s staff-level statement on May 29, 2025, marks a rare moment of regulatory clarity in crypto. For staking-as-a-service providers, it carves out a space where solo staking, self-custodial delegation, and custodial staking without discretionary control are expressly considered non-securities under federal law.
Gone are the days where every staking model faced SEC uncertainty—at least for these specific, well-defined frameworks. Ancillary services like slashing protection, early unbonding, alternative rewards scheduling, and stake aggregation come with a green light—so long as your role stays administrative.
Still, this isn’t a license to innovate without limits. The SEC explicitly excludes liquid staking, restaking, and strategies involving operator discretion or financial layering. Custodial actors must avoid making any managerial decisions. Courts and private suits can still challenge your model—this guidance isn’t legally binding.
In practice, that means:
Audit your contracts.
Stay administrative.
Grow smart.
Avoid complex staking overlays.
Monitor the horizon.
This guidance isn’t just legal ink—it’s a business blueprint. The path is lit—but stepping off it could reignite enforcement.
Assets can’t be lent, margin traded, leveraged, or used elsewhere.
If your service strays—say you optimize yield, shift protocols, or schedule stakes based on market indicators—you risk crossing into a securities offering.
Fact-Specific Analyses Still Apply
This statement is non-binding and fact-driven. The SEC retains the right to scrutinize individual operations. Something like a staking bundle that looks decentralized in theory might, in practice, cross the line.
What’s Still Unclear
Depth of discretion: There’s no bright-line threshold—only guidance that any discretion beyond administrative duties is risky.
Compound or leveraged staking models: If your architecture wraps token use multiple times, the SEC hasn’t weighed in.
Cross-chain & liquid derivative overlays: These are glossed over entirely by the statement.
Private litigation or state-level suits: Even if the SEC holds off, private lawsuits may still challenge staking models.
Reaction from the Industry
Commissioner Peirce: Filling a Regulatory Void
Commissioner Hester Peirce, often known as “Crypto Mom,” expressed strong support. She described the statement as providing “welcome clarity” that had been sorely missing. For her, this guidance enables U.S. stakers and staking-as-a-service providers to operate without constantly fearing enforcement backlash.
Commissioner Crenshaw: Wary of Overreach
On the other hand, Commissioner Caroline Crenshaw voiced deep reservations, calling the guidance vague and potentially conflicting with prior court rulings. She warned that without clear boundaries, future aggressive enforcement remains possible, and even lightly structured staking could end up labeled as a security.
Legal Community: Cheers Mixed With Caveats
Law firms and analysts hailed the decision as a milestone—finally applying Howey in a nuanced way that recognizes administrative staking as non-entrepreneurial. They highlight two broad takeaways:
Legal Affirmation: Core staking models (solo, delegated, custodial without discretion) now rest on firmer ground.
Still Room for Debate: The precise meaning of “discretion” remains unclear—leaving entire service types in a gray zone.
Institutional & ETF Potential
This decision could activate staking for institutional players. Ethereum- or Solana-backed ETFs, previously barred from staking, may now reconsider their structures. Analysts from major institutions suggest this guidance was the last piece needed to move these funds forward.
Caution from Providers
Even with this clarity, staking service providers are proceeding carefully:
They’re auditing contracts and interfaces.
They’re imposing strict role boundaries—ensuring they don’t select stakes or manage rewards.
They’re consulting with counsel to validate that none of their services backslide into “managerial control.”
