The United States Securities and Exchange Commission (SEC) is currently facing a wave of backlash as it navigates its recent changes regarding crypto staking services. On May 29, the SEC’s Division of Corporation Finance released new guidance suggesting that certain staking offerings may not qualify as securities. This guidance effectively aims to exempt proof-of-stake blockchains from the registration requirements stipulated under the Security Act. However, this abrupt alteration has raised eyebrows, particularly from industry insiders and former regulators alike, who claim that this approach contradicts previous enforcement efforts and legal decisions.
Critics, including former SEC chief of Internet Enforcement John Reed Stark, argue that the SEC’s current interpretation diverges significantly from established judicial findings. Stark pointed out that high-stakes cases against major crypto exchanges such as Binance and Coinbase have previously upheld allegations that staking products fall under the categorization of securities. Notably, in a statement on X, Stark remarked, “This is how the SEC dies – in plain view,” condemning the recent shift as a regression in the agency’s commitment to protecting investors.
In the case of Binance, the SEC claimed that the exchange’s staking services were essentially unregistered securities offerings. However, this case was eventually dismissed in May 2025, marking a critical turning point in the SEC’s strategy towards cryptocurrency regulation. A similar situation arose involving Coinbase, where a federal judge allowed proceedings to advance, indicating the SEC had adequately presented claims that its staking program involved securities sales. Ultimately, this case too saw dismissal as part of a broader reevaluation of SEC practices concerning digital assets.
Amidst the ongoing confusion, SEC Commissioner Caroline Crenshaw articulated her concerns regarding the inconsistency of the agency’s actions. In her statement, she highlighted how the SEC appears to treat specific digital assets, such as Ether (ETH) and Solana (SOL)</strong), as securities in some contexts, but not in others. This inconsistency raises critical questions about the SEC's overall strategy in regulating crypto and calls into question their interpretation of the Howey test, a longstanding criterion used to determine whether certain transactions qualify as investments.
Despite the substantial criticism, Commissioner Hester Peirce defended the SEC’s new stance at a recent Bitcoin conference, suggesting that the classification of a transaction as a securities deal depends more on the nature of the transaction itself than on the assets involved. According to Peirce, “Most crypto assets, as we see them today, are probably not themselves securities.” She emphasized the need for clearer guidance to rectify existing ambiguities surrounding crypto asset classifications.
As the SEC embarks on what critics term a “crypto-deregulatory blitzkrieg,” Markings on the agency’s legacy are becoming increasingly apparent. The ongoing uncertainty surrounding crypto regulation and the stance towards staking continues to be a focal point of discourse within both regulatory and investment communities. While the SEC asserts its intention to foster a clearer regulatory environment, many view the recent moves as escalating confusion rather than clarity.
