SEC faces 90-year legacy questions amid crypto staking debate

The US Securities and Exchange Commission (SEC) is encountering criticism from current and former officials over its revised stance on crypto staking services.

On May 29, the SEC’s Division of Corporation Finance issued new guidance suggesting that certain crypto staking offerings may not be considered securities, effectively exempting proof-of-stake blockchains from registration requirements under the Securities Act.

However, this shift appears to conflict with several federal court rulings, according to John Reed Stark, former SEC chief of Internet Enforcement.

Stark stated on X that the agency’s new position contradicts judicial findings in cases against crypto exchanges Binance and Coinbase, where courts allowed allegations that staking products qualified as securities under established legal precedent.

“This is how the SEC dies – in plain view,” Stark wrote, calling the change “a shameful abdication of its investor protection mission.”

The SEC had alleged Binance’s staking services were unregistered securities offerings, but the case was dismissed with prejudice in May 2025, barring similar claims.

In March 2024, a federal judge allowed the SEC’s case against Coinbase to proceed on similar grounds, though it was dismissed in February 2025 amid the agency’s regulatory shift.

Commissioner Caroline Crenshaw also criticised the new guidance, stating it does not align with the Howey test or existing court decisions.

“The staff’s analysis may reflect what some wish the law to be, but it does not square with the court decisions on staking and the longstanding Howey precedent,” she said.

Crenshaw further described the SEC’s approach as “fake it till we make it,” acting on anticipated future changes while ignoring current law.

The SEC has recently taken deregulatory steps including closing investigations, dropping lawsuits, and hosting industry roundtables.

Critics argue these moves have increased regulatory uncertainty rather than clarity.

“How is it that these crypto assets are supposedly not securities when it comes to registration requirements, but conveniently are securities when a registrant sees an opportunity to sell a new product?” noted Crenshaw, questioning the agency’s inconsistent treatment of assets like Ether (CRYPTO:ETH) and Solana (CRYPTO:SOL).

At Bitcoin 2025, Commissioner Hester Peirce emphasised that whether a transaction is a securities offering depends on the nature of the deal, not the asset itself.

“Most crypto assets, as we see them today, are probably not themselves securities. That doesn’t mean that you can’t sell a token that is not itself a security in a transaction that is a securities transaction,” she said.