A coalition of nearly 30 crypto advocate groups, spearheaded by the Crypto Council for Innovation (CCI), has reached out to the Securities and Exchange Commission (SEC) requesting clear regulatory guidance on cryptocurrency staking and related services.

The CCI's Proof of Stake Alliance (POSA) group penned a letter on April 30 to the SEC's Crypto Task Force lead, Commissioner Hester Peirce. In the letter, the group argued that staking is primarily a technical process and not an investment activity. They emphasized the critical role that staking plays in supporting the decentralized internet, calling it the backbone of the ecosystem.

The SEC had solicited public input on whether staking and liquid staking, where users lock up their tokens to earn rewards, should be subject to federal securities laws. The coalition urged the SEC to back the responsible inclusion of staking features in exchange-traded products (ETPs) and cautioned against overly restrictive regulations that could hinder market development and innovation in the staking space.

Highlighting that staking does not meet the Howey test definition of an "investment contract" as stakers retain ownership of their assets, the group emphasized that rewards in staking are determined by blockchain protocols, not by the provider's decisions akin to a company's profit-making activities.

The letter called for the SEC to issue principles-based guidance similar to recent statements by SEC staff on proof-of-work mining. The group expressed positivity about the growing dialogue and collaboration with the SEC in recent months, indicating a shift towards a more cooperative approach between the industry and regulators.

The Proof of Stake Alliance boasts support from prominent crypto players such as Andreessen Horowitz, Consensys, and Kraken, among others. Kraken, for instance, reinstated its staking services in the US earlier this year, underscoring the importance of regulatory clarity in this space.

The SEC's stance on crypto staking remains under scrutiny, with delays in approving a crypto staking exchange-traded fund (ETF) and a recent postponement in deciding on staking for Grayscale's spot Ether ETF. Analysts speculate that an Ether ETF incorporating staking could potentially emerge as early as May, indicating a growing interest in integrating staking into mainstream financial products.

Overall, the push for regulatory clarity on staking services highlights the industry's commitment to fostering innovation while ensuring compliance with existing regulations, paving the way for a more robust and transparent crypto ecosystem.

Source: https://cointelegraph.com/news/us-crypto-groups-urge-sec-clarity-cryptostaking?utm_source=rss_feed&utm_medium=rss&utm_campaign=rss_partner_inbound