SEC Sparks Controversy with Crypto Staking Decision
The U.S. Securities and Exchange Commission (SEC) is under growing scrutiny from both current and former officials over its shifting position on crypto staking services.
On May 29, the SEC’s Division of Corporation Finance released guidance suggesting that some staking services might not qualify as securities, potentially removing the requirement for proof-of-stake blockchain offerings to register under the Securities Act.
Former SEC Internet Enforcement chief John Reed Stark criticized the move, saying it stands in contrast to previous court rulings in major cases against Binance and Coinbase.
In those cases, judges allowed claims that staking programs constituted unregistered securities offerings, in line with existing legal precedent.
Stark called the SEC’s new position “a shameful abdication of its investor protection mission,” and said, “This is how the SEC dies – in plain view.”
The SEC had earlier alleged that Binance’s staking program involved unregistered securities, but the case was dismissed with prejudice in May 2025.
Similarly, a judge permitted the SEC’s case against Coinbase to proceed in March 2024, stating that the agency had “sufficiently pled” its argument.
That case was also dismissed in February 2025, reflecting the SEC’s evolving regulatory stance.
Commissioner Caroline Crenshaw voiced concern in a May 29 statement, asserting that the staff’s conclusions do not align with legal precedent or the Howey test, which defines securities.
Crenshaw said, “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 on which they are based.”
She described the agency’s approach as a “‘fake it till we make it’” strategy that ignores current law.
Recently, the SEC has taken a more lenient approach toward digital assets—dropping lawsuits, ending investigations, and holding roundtables with industry leaders.
Stark referred to this shift as a “crypto-deregulatory blitzkrieg” that has undermined the commission’s legacy.
Crenshaw also questioned the consistency of the SEC’s approach, particularly regarding the classification of assets like Ethereum and Solana.
She pointed out the contradiction of treating these tokens as non-securities for registration purposes, but as securities when launching new financial products.
Meanwhile, at the Bitcoin 2025 conference in Las Vegas, Commissioner Hester Peirce offered a different view.
She explained that whether something constitutes a securities transaction depends on how it is sold, not necessarily the nature of the asset itself.
Peirce stated, “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. That is where we really need to provide some guidance.”
Sources:
https://cointelegraph.com/news/sec-faces-criticism-over-crypto-staking-shift
https://www.sec.gov/newsroom/speeches-statements/crenshaw-statement-protocol-staking-052925
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