SEC Faces Criticism Over Changing Stance on Crypto Staking
The Securities and Exchange Commission (SEC) is encountering heightened scrutiny from both current and former officials regarding its shifting perspective on crypto staking services.
On May 29, the SEC’s Corporation Finance division released new guidance suggesting that some crypto staking services may not be classified as securities. This means they could potentially be exempt from registration requirements under the Securities Act.
However, this interpretation has raised eyebrows, with former SEC internet executive John Reed Stark noting that it seems to contradict various federal court rulings. He pointed out that the SEC’s recent stance diverges from a well-known case involving crypto exchanges Binance and Coinbase, where a judge had previously deemed certain allegations valid under long-standing legal principles.
“This is how the SEC dies – with obvious vision,” Stark remarked in a lengthy response, labeling this change as a “shady abandonment of the investor protection mission.”
In the case of Binance, the SEC had initially claimed that the exchange’s staking services counted as the provision of unregistered securities. However, the case was dismissed in May 2025 due to bias, effectively barring similar claims. Meanwhile, in a separate case against Coinbase, a federal judge allowed the SEC to move forward, although that lawsuit was later dismissed in February 2025 as part of the SEC’s evolving approach to crypto regulation.
Commissioner Caroline Crenshaw expressed her concerns about the SEC’s stance on May 29, acknowledging that the staff’s conclusions didn’t align with established case law and the Howie test. She stated, “The staff analysis might reflect what the law aims for, but it doesn’t match the court rulings based on that and the long-standing Howie precedent.”
“This is another example of the SEC’s ongoing ‘Fake It Till We Make It’ approach – taking action in anticipation of future changes while disregarding existing laws.”
Recently, the SEC has undertaken a series of deregulation measures concerning digital assets, which included closing investigations and initiating discussions with industry stakeholders.
Stark described these actions as a “crypto penetration blitz.”
Though the SEC frames its recent moves as efforts to provide regulatory clarity, critics argue that the outcomes have led to greater confusion. On June 2, Crenshaw referred to the committee’s approach, which seemed inconsistent in treating certain digital assets like Ether (ETH) and Solana (SOL) tokens as securities.
“These crypto assets likely aren’t securities in terms of registration requirements, but are they viable for registrants looking to market new products?” Crenshaw questioned.
During the Bitcoin 2025 conference in Las Vegas, Commissioner Hester Peirce defended the agency’s new viewpoint on crypto, suggesting that whether something qualifies as a security largely depends on how the transaction itself is structured, not solely on the assets involved.
“Today, most crypto assets are probably not securities in and of themselves. That doesn’t mean you can’t sell tokens that are not securities as part of transactions that are,” she noted, emphasizing the need for clearer guidance.
