The US Securities and Exchange Commission (SEC) is facing mounting criticism from current and former officials over its evolving stance on crypto staking services.ย
On May 29, the SECโs Division of Corporation Finance issued new guidance on crypto staking services, claiming that certain offerings may not constitute securities and effectively exempting proof-of-stake blockchains from registration requirements under the Securities Act.
However, the SEC’s fresh interpretation may diverge from several federal court rulings, according to former SEC chief of Internet Enforcement, John Reed Stark.
In a statement on X, Stark argued the Commissionโs latest move contradicts judicial findings in high-profile cases against crypto exchanges Binance and Coinbase, where judges previously allowed allegations that staking products qualified as securities under long-standing legal precedent.
โThis is how the SEC dies โ in plain view,โ Stark wrote in a lengthy response to the agency, calling the shift โa shameful abdication of its investor protection mission.โย
As for Binance, while the SEC alleged that the exchangeโs staking services constituted unregistered securities offerings, the case was ultimately dismissed with prejudice in May 2025, preventing the agency from filing similar claims. Similarly, in March 2024, a federal judge allowed the agencyโs case against Coinbase to proceed, indicating that the SEC had โsufficiently pledโ that the staking program involved the unregistered offer and sale of securities. The case was also dismissed in February 2025 as part of a broader shift in the SEC’s approach to crypto regulation.
Sitting Commissioner Caroline Crenshaw also issued a statement on May 29 in response to the agencyโs approach to crypto staking, warning that the staffโs conclusions did not align with established case law or the Howey test.
โThe staffโs 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,โ Crenshaw wrote, adding that:
โThis is yet another example of the SECโs ongoing โfake it till we make itโ approach to crypto โ taking action based on anticipation of future changes while ignoring existing law.โ
The commission has recently undertaken a series of deregulatory steps over digital assets, including closing investigations, dropping lawsuits and launching roundtables to discuss regulation with industry participants.ย
โThis crypto-deregulatory blitzkrieg,โ Stark wrote, โhas destroyed a once-proud 90-year legacy.โ
Related: SECโs Crenshaw slams Ripple settlement, warns of โregulatory vacuumโ
While the SEC has framed its recent actions as part of an effort to provide regulatory clarity, critics contend that the result has been further confusion.ย
In a June 2 statement, Crenshaw questioned the consistency of the commissionโs approach, pointing to instances where the agency appeared to treat certain digital assets, such as Ether (ETH) and Solana (SOL) tokens, as securities.
โHow 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?,โ Crenshaw said.
Speaking at the Bitcoin 2025 conference in Las Vegas, Nevada, Commissioner Hester Peirce pushed back against criticism of the agencyโs new take on crypto, noting that the classification of a securities transaction depends more on the nature of the deal than the asset itself:
โMost crypto assets, as we see them today, are probably not themselves securities. That doesnโt mean that you canโt 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.โ
Magazine:ย Deposit risk: What do crypto exchanges really do with your money?
