Crypto Market News: SEC Declares Crypto Protocol Staking Is Not a Securities Transaction — Major Win for U.S. Crypto Regulation

In a pivotal move for the U.S. crypto industry, the Securities and Exchange Commission (SEC) has confirmed that protocol-level staking on proof-of-stake blockchains is not a securities transaction. This guidance marks a significant departure from the agency's prior ambiguity, offering much-needed regulatory clarity and paving the way for potential approval of Ether (ETH) staking ETFs. Industry leaders welcomed the news as a milestone toward sensible and innovation-friendly digital asset policy in the U.S. Main Body:SEC’s Clarification on StakingOn May 29, the SEC’s Division of Corporation Finance stated that “Protocol Staking Activities” do not require registration under the Securities Act. The clarification applies to both custodial and non-custodial staking services that simply support the operation of decentralized networks.“The SEC has now recognized what we’ve long argued: staking is a core part of how modern blockchains operate, not an investment contract,” said Alison Mangiero, head of staking policy at the Crypto Council for Innovation (CCI).This announcement is seen as a victory for advocacy groups such as the CCI and its Proof of Stake Alliance, which submitted formal recommendations to the SEC earlier this year.Implications for Ethereum and Staking ETFsAlthough the SEC has yet to approve any Ether staking ETFs, analysts say this guidance is a foundational step toward that goal.“This represents genuine progress toward regulatory clarity,” noted Marcin Kazmierczak, COO of RedStone. “Staking ETF approval is becoming increasingly plausible by late 2025.”Currently, the SEC has delayed decisions on proposals from Bitwise and Grayscale that seek to incorporate staking into ETH ETF offerings.Background: Shift from Enforcement to FrameworkThe SEC’s clarification comes just months after launching a dedicated Crypto Task Force in January 2025, led by Commissioner Hester Peirce. The task force aims to propose formal frameworks that differentiate core blockchain operations from investment products.The move signals a departure from an enforcement-first approach to one focused on regulatory alignment and innovation.The SEC’s latest stance offers a rare dose of regulatory clarity for the U.S. crypto market. By formally recognizing protocol staking as a technical mechanism rather than a security, the agency may be laying the groundwork for more nuanced crypto policies — and for unlocking institutional-grade products like ETH staking ETFs in the near future.