The SEC’s Division of Corporation Finance May 29 statement declaring that protocol-level staking on public, permissionless blockchains is not an offer or sale of securities marks a decisive inflection in U.S. policy toward proof-of-stake (PoS) networks. We view it as the second leg of a broader pivot that began in March, when the agency said PoW and related mining activities also fall outside the securities perimeter. Taken together, the two pronouncements shift the narrative from “regulation by enforcement” toward a more predictable framework that recognizes the technical backbone of crypto as distinct from investment contracts.
We believe the immediate winners are node operators and the large custodial exchanges that already restarted pared-back staking programs earlier this year. Kraken relaunched staking for non-U.S. users in January; Coinbase quietly revived its Earn staking program over the past year; and we expect other institutions and enterprises seeking to participate in PoS networks , will roll out a U.S. version soon. Yet, many of these companies have to continue navigating remaining state-level roadblocks—California, Maryland, Wisconsin and New Jersey still have cease-and-desist orders for staking in place. Still, the statement should accelerate similar offerings across the brokerage and fintech landscape by removing the biggest federal overhang.
By contrast, providers that wrap staking in fixed-rates, rehypothecation, or other yield enhancements remain exposed as the SEC staff explicitly omitted liquid staking tokens, restaking, and liquid-restaking wrappers from its safe harbor. In our view, that omission keeps a large slice of the market in limbo. Liquid staking accounts for roughly half of all staked ether, yet last week’s guidance stops short of endorsing LSTs or EigenLayer-style restaking. Until the SEC addresses those structures—or until Congress writes them into statute—we do not expect Coinbase or other US crypto companies to offer them to retail users.
We also think that the SEC’s explicit carve-out for “Ancillary Services” deserves more attention. By confirming that slashing insurance, early unbonding, flexible reward-payment schedules, and stake aggregation are all administrative or ministerial, and therefore outside Howey, the staff is effectively green-lighting a suite of user-experience upgrades that many providers had shelved out of caution. We expect the ruling to unleash new products—from brokerages offering instant-unstake liquidity and insurers providing slashing coverage to custodians batching deposits and passing through rewards on flexible schedules.
The likely next step from the SEC is to allow for spot ETH ETPs to stake a portion of fund assets. We believe the staff statement paves the way for a staking 'green light' for investment products. All ETF providers are already discussing staked ETH product launches with regulators, though no timeline exists yet
Overall, we see the statement as a constructive catalyst. By stripping protocol staking of securities risk while reserving scrutiny for packaged yield enhancements, the SEC encourages broader validator participation and deeper economic security across PoS ecosystems. The resulting growth in native staking should, in our view, lift demand for infrastructure, analytics, and secure node-operation services industry-wide. For a market still digesting the implications of the GENIUS Act and other crypto policy reforms, this cautiously upbeat signal from the SEC is a timely boost and one that positions the US to play a larger role in the next phase of crypto’s institutional adoption.
The information provided here is intended solely for general informational purposes. It should not be considered, or relied upon, as legal, business, tax, or investment advice.
About Kiln
Kiln is the leading staking and digital asset rewards management platform, enabling institutional customers to earn rewards on their digital assets, or to whitelabel earning functionality into their products. Kiln runs validators on all major PoS blockchains, with over $11 billion in crypto assets being programmatically staked and running over 5% of the Ethereum network on a multi-client, multi-cloud, and multi-region infrastructure. Kiln also provides a validator-agnostic suite of products for fully automated deployment of validators and reporting and commission management, enabling custodians, wallets, and exchanges to streamline staking or DeFi operations across providers. Kiln is SOC2 Type 2 certified.
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