Opinion by: Margaret Rosenfeld, chief legal officer of Everstake
At the dawn of the internet in the late 1990s, technology outpaced regulation — and lawyers, engineers and policymakers had to learn together in real-time. Some regulators saw the internet as a threat, others as a challenge.
The ones who made the most significant difference, however, were those willing to engage directly with how the technology worked. That kind of engagement — technical fluency, not technophobia — enabled the internet to evolve from fringe novelty to familiar infrastructure.
The same is now true for crypto, and the Securities and Exchange Commission’s (SEC) recent statement on staking is an early sign that the agency is beginning to recognize the difference between participating in a network and investing in a security.
A turning point for crypto regulation
The SEC’s May 2025 guidance on specific protocol staking activities marked the first time the SEC publicly acknowledged that some forms of staking may fall outside the definition of securities transactions. In doing so, it offered a long-awaited signal: Contributing to blockchain consensus — particularly in a non-custodial or protocol-native manner — might not require securities registration.
This is a pivotal shift. If staking is correctly treated as infrastructure participation rather than speculative investment, it could realign the US with other jurisdictions that have taken a more nuanced approach.
The core issue is the application of the legal Howey test. For years, critics have argued that staking inherently involves an “investment of money in a common enterprise with an expectation of profits from the efforts of others.” This assumes that all staking resembles centralized yield products — when many proof-of-stake mechanisms operate without custody, pooling or performance promises. When tokenholders delegate to validators, they help secure the network, not enter into a contract for profit.
This is not a theoretical distinction. Treating protocol staking as a securities transaction imposes extensive compliance burdens: registration, disclosures, custody requirements and anti-fraud obligations designed for traditional financial instruments.
If those rules are applied to open-source blockchain infrastructure, the result would be chilling validator activity and pushing innovation offshore. However, a differentiated framework that separates non-custodial staking from custodial or pooled models preserves investor protection and protocol decentralization.
Policy progress starts with protocol-level understanding
What enabled this more sophisticated regulatory understanding was not just legal theory but technical explanation. Effective dialogue between regulators and the industry required more than submitting legal briefs. It required walking through validator operations, staking mechanics and protocol-level design with engineers, developers and infrastructure operators.
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When regulators engage with lawyers and those building the systems, policy becomes rooted in real-world understanding. The SEC’s latest language reflects that kind of informed, collaborative engagement.
The statement does not eliminate enforcement risk, especially for platforms that blend staking with liquidity guarantees or profit assurances. It does indicate that the agency is willing to look at technical realities.
The market effect of that shift is significant. It gives US-based developers and validators a stronger legal footing and sends a signal to institutional participants that there is room for compliant infrastructure development.
Commissioner Hester Peirce has long urged the SEC to evaluate blockchain services based on their actual design rather than superficial resemblance to legacy finance. In line with that view, the agency’s new guidance implicitly acknowledges that not every staking model involves a “promoter,” an “issuer” or a promise of profits. This shift would allow developers to build systems that support network security without fear of triggering securities laws if appropriately implemented.
Skeptics argue that any token-based reward mechanism is, by nature, a financial return. This flattens the diversity of blockchain protocols. Often, staking rewards are protocol-defined emissions tied to network participation — not discretionary payments from a centralized entity. Delegators retain control of their assets, and validators perform a technical service rather than a financial one. Economic design is closer to system maintenance than equity investment.
This isn’t just semantics — it’s the foundation of how decentralized infrastructure works. Applying one-size-fits-all securities laws to such systems risks distorting incentives, over-regulating developers and leaving the US behind in the global competition for blockchain talent.
That’s why it’s so important that the SEC appears willing to engage in dialogue — not just dictate outcomes.
Building smarter policy through collaboration
Better regulation doesn’t always mean creating entirely new laws. It means interpreting existing frameworks with a full understanding of the underlying technology. That includes recognizing when certain activities — like non-custodial staking — do not meet the threshold of a securities transaction, even if they resemble financial activity at a surface level.
The SEC’s statement is not a blanket safe harbor. It does, however, signal that technology-specific engagement is happening and that the SEC may be prepared to continue differentiating between infrastructure and investment. That’s not just good policy — it’s how innovation takes root.
Like the internet era, crypto will evolve from fringe to frontier to familiar — but only if regulators take the time to understand how blockchain systems actually function. The SEC’s move on staking shows that kind of understanding is possible. More progress will follow if the industry continues to meet policymakers at the table — not just with legal arguments, but with real-world education.
Opinion by: Margaret Rosenfeld, chief legal officer of Everstake.
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
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