SEC says consensus-linked staking isn’t a securities offering; DeFi yield schemes still in crosshairs
On May 29, 2025, the U.S. Securities and Exchange Commission’s Division of Corporation Finance issued guidance clarifying that protocol staking directly tied to a network’s consensus-solo, delegated, and certain custodial staking-does not constitute a securities offering, while ROI‑guaranteed DeFi bundles, yield farming unrelated to consensus, and lending disguised as staking may still be treated as securities.
Key Facts
- Staking rewards for validating and securing proof‑of‑stake (PoS) networks are characterized as compensation for services, not profits from others’ managerial efforts under Howey.
- Permissible models include solo validators, non‑custodial delegation to third‑party node operators, and custodial staking when assets remain segregated and activity is transparently disclosed.
- Yield farming, ROI‑promising DeFi packages, and lending activities labeled as “staking” remain subject to securities laws.
- The guidance does not expressly resolve liquid staking, staking‑as‑a‑service variations, restaking, or liquid restaking.
Context
The move addresses long‑standing uncertainty in the U.S. over whether staking rewards are securities, an issue that affected exchanges and validator services and dampened institutional participation in PoS ecosystems. For Base‑aligned builders and users operating atop Ethereum, clearer staking rules at the consensus layer could reduce legal friction for custody and validator infrastructure connected to Base’s ecosystem.
Details
According to the SEC’s guidance, protocol staking integrated with a network’s consensus is treated as an administrative or technical service rather than an investment in a third party’s enterprise. The agency also outlined “ancillary services” that may be offered without altering that analysis, including slashing coverage, early unbonding facilitation, flexible reward distribution schedules aligned with protocol output, and asset aggregation to meet staking minimums.
Conversely, activities that pool assets into products with guaranteed or marketed returns, or that generate yields via lending or third‑party strategies while using “staking” branding, may be deemed securities offerings. The staff noted the statement addresses protocol staking generally and does not cover all variants, including liquid staking and restaking.
Industry participants-validators, custodians, and institutional allocators—are expected to benefit from reduced regulatory ambiguity around consensus‑based staking. For Base ecosystem teams, custodial services that pass through consensus rewards with clear segregation and disclosure appear within scope, while “yield” products built on top of staked assets require careful securities analysis.
Analysis
Ecosystem implications: The clarification should catalyze growth in compliant validator and custody infrastructure that underpins Ethereum and, by extension, Base’s rollup environment. LSDfi and restaking‑adjacent projects on Base may reassess product design to avoid profit guarantees or opaque strategies that could trigger securities treatment.
Competitive positioning: U.S. venues may see renewed institutional interest in consensus‑aligned staking, narrowing a perceived regulatory gap with jurisdictions offering clearer PoS rules. Builders on Base that emphasize transparency, segregation of assets, and protocol‑determined rewards are positioned to benefit.
Future outlook: The market will look for follow‑on clarity around liquid staking and restaking. Exchanges and custodians serving Base users are likely to update disclosures and fee structures to align with the guidance.
Background
The SEC previously scrutinized U.S. exchange‑run staking programs, including a 2023 settlement with Kraken over a staking‑as‑a‑service offering and ongoing litigation with Coinbase over broader securities claims. The Howey test—centered on investment of money in a common enterprise with an expectation of profits predominantly from others’ efforts—has been the regulatory lens for crypto offerings. The new guidance distinguishes protocol‑level staking from investment contracts.
What’s Next
Stakeholders expect implementation updates from custodians, validators, and DeFi platforms, and potential SEC staff FAQs or additional statements addressing liquid staking and restaking. Base‑native projects offering “yield” products may publish revised disclosures and structures to emphasize consensus‑linked reward flows and avoid return guarantees.
Sources
- U.S. Securities and Exchange Commission, Division of Corporation Finance – Guidance on protocol staking (published May 29, 2025)
- Cointelegraph coverage: SEC clarifies staking that supports network consensus is not a securities offering (published May 29, 2025)
