The U.S. Securities and Exchange Commission (SEC) issued a major update on 29 May 2025, changing how it views most crypto staking practices. The new guidance, released by the Division of Corporation Finance, says that most protocol staking is not a securities offering. This marks a break from the stricter policy line followed under Gary Gensler.
Gensler’s Legacy on Staking
Under former Chair Gary Gensler, the SEC treated staking services as securities. If a user handed over tokens to an exchange or platform that pooled those assets and paid rewards, the agency often saw that as an unregistered investment contract.
The clearest example came in February 2023. Kraken, one of the top U.S.-based exchanges, paid a $30 million settlement and shut down its U.S. staking service. That move set the tone for future enforcement actions. Coinbase and Binance both received Wells notices related to staking in the following year.
The industry grew nervous; even some crypto casinos suffered temporary payment issues. Developers paused new staking products. Some exchanges have limited features or restricted U.S. access. Listing proof-of-stake (PoS) tokens like ETH and SOL became riskier.
New Guidance Says Most Staking is Not a Security
The new SEC guidance changes that outlook. According to the statement, staking does not count as a securities offer if three main conditions are met:
- The user keeps control of their tokens.
- Rewards are distributed directly from the protocol.
- There is no fixed-rate yield or management discretion from the service provider.
In short, if a user stakes coins directly to a protocol like Ethereum or Solana and retains full custody, the SEC will not treat the setup as an investment contract.
Peirce and Uyeda Support the Move
Acting Chair Mark Uyeda and Commissioner Hester Peirce backed the new position. Both have previously criticized the lack of clear crypto rules. Peirce said this is the kind of guidance that helps the industry build with confidence. Uyeda added that it reflects a more practical understanding of how blockchain networks work.
Not everyone at the Commission agrees. Commissioner Caroline Crenshaw issued a separate statement warning that the new stance could encourage “risky yield farming schemes.” She argued that some services may exploit these rules and harm retail users.
Impact on Exchanges and Validators
The update brings relief to U.S. exchanges that support PoS assets. They now have a clearer path to offering staking features without automatically triggering enforcement risks.
For example, centralized platforms can support non-custodial staking by routing users’ tokens to validators without pooling or taking control. Wallet providers and validator services can also expand without fear of being labeled unregistered securities brokers.
In the past, staking rewards flowing through exchanges were seen as a financial product. Now, if the structure avoids fixed returns and lets users unstake at will, it is unlikely to face the same scrutiny.
Possible Opening for ETH Staking ETFs
Analysts also point out that this shift may benefit Ethereum and other PoS chains in broader financial markets. With clearer rules on what is and isn’t a security, Ethereum-staking ETFs may now have a better shot at approval.
Any fund that allows ETH staking through a pass-through model, where users keep ownership, and rewards come from the protocol, could align with the SEC’s new framework.
That opens up new investment routes for institutions and could boost the liquidity of PoS networks without adding legal risk to issuers or custodians.
Crypto Policy Under the Trump SEC
This change fits into a broader pattern seen since the new administration took office in January 2025. The Trump-appointed SEC leadership has steadily pulled back from the enforcement-heavy approach favored by the previous team.
Rather than using lawsuits to define the rules, the agency is now focusing on written guidance, public comments, and potential rulemaking. The staking announcement is the clearest sign yet that crypto policy is shifting in tone and content.
Not a Binding Rule, But a Strong Signal
It’s important to note that this guidance is not a formal SEC rule. It reflects the staff’s current thinking and provides insight into how the Commission may act in future cases. Platforms that lie outside the three main criteria could still face action, especially if they offer set yields, mislead users, or control users’ private keys.
Still, the guidance reduces the legal grey area. It gives developers, exchanges, and wallet services a reliable outline for what staking setups are likely to avoid securities classification.
What Comes Next for U.S. Staking
Crypto firms now have a chance to rethink their staking strategies. Rather than shutting down or operating offshore, they can design products that align with the new framework.
Users also benefit. More staking tools may come back to U.S. platforms. With better clarity and fewer legal risks, staking can once again be a key feature in crypto investing.
That doesn’t mean every staking model is safe. Custodial platforms that promise high fixed rewards and offer little transparency may still fall under the SEC’s scrutiny. But for standard, protocol-based staking with user-held tokens, the legal path is now far less risky.
Final Thoughts
This latest move draws a clean line between Gensler’s past approach and the SEC’s present direction. The agency no longer treats all staking as a threat. It now acknowledges the difference between pass-through protocol rewards and centralized yield products.
That one shift gives the U.S. crypto industry space to innovate without constantly looking over its shoulder. It also signals that clearer, tech-informed crypto policy may finally be on the table.
