Crypto Coalition Tells SEC Staking Is 'Essential Good,' Not a Security

The Crypto Council for Innovation is making a case with the U.S. Securities and Exchange Commission that staking is not only a virtue for digital asset markets, but it should be hands-off for the securities regulator.
The group — a coalition of staking interests, including Kraken, a16z, Lido, Galaxy, Figment, Polychain and Paradigm — argued in a letter to the agency's crypto task force that the logic behind the SEC staff's recent statement that "proof-of-work" crypto mining isn't a securities transaction under the agency's jurisdiction, should extend to the practice of staking, pulling it out of the securities bucket.
"Stakers, like PoW miners, are compensated based on protocol-defined outcomes, not managerial actions or profit-sharing arrangements," according to the letter reviewed by CoinDesk.
When users stake their coins, they agree to have them locked up for a certain period of time to participate in the operation and security of a blockchain, and they earn a return for that. Those who stake their crypto assets on "proof-of-stake" blockchain protocols are providing "valuable technical services," and the resulting rewards aren't passive investment gains, the group contends.