The US Securities and Exchange Commission (SEC) has held discussions with Everstake, one of the largest non-custodial staking providers globally, to explore clearer regulatory definitions around staking in blockchain networks.
The meeting, which also involved the SEC’s Crypto Task Force, comes at a time when over $193 billion in digital assets are staked across major proof-of-stake (PoS) networks.
However, despite the massive scale of participation, staking remains in a legal gray zone in the US as regulators wrestle with its classification under existing securities law.
The previous SEC administration also took enforcement actions against major players such as Kraken, Coinbase, and Consensys due to their staking services. The agency, under pro-crypto President Donald Trump, has recently dismissed these enforcement actions.
During the meeting, Everstake told the SEC that non-custodial staking should not be classified as a securities transaction. The company said that users maintain full control over their digital assets throughout the staking process and do not transfer ownership to a third party.
They argued that this makes staking a technical function, not an investment product.
“Our main assertion is that staking is not a financial instrument or security transaction, but rather a technical process, a base-layer protocol mechanism—akin to an oracle in a database—that maintains the integrity and functionality of decentralized networks,” Everstake founder Sergii Vasylchuk told Cointelegraph.
Related: SEC delays staking decision for Grayscale ETH ETFs
Everstake calls for regulatory clarity
In a letter submitted to the SEC’s Crypto Task Force on April 8, 2025, Everstake asked the agency to extend regulatory clarity to non-custodial staking and custodial and liquid staking models.
In the letter, which came in respond to Commissioner Hester Peirce’s call for input on regulatory treatment of blockchain services, Everstake argued that non-custodial staking should not be considered a securities offering.
It claimed that non-custodial staking, where users retain control of their tokens, does not involve the pooling of assets or the expectation of profits from managerial efforts.
In its model, Everstake said users delegate only validation rights while maintaining ownership of their digital assets. The staking rewards are algorithmically distributed by the blockchain network itself, and the firm merely provides technical infrastructure.
Related: Ethereum ETF staking will have little impact without multimonth rally: Analyst
Non-custodial staking fails the Howey test
The letter also details why non-custodial staking fails each prong of the Howey test. Users do not make an investment of money in a common enterprise, do not expect profits from Everstake’s efforts, and are not dependent on the company’s management for financial returns.
Instead, any rewards come from network-level incentives and fluctuate with the market value of the underlying asset.
Everstake proposes specific criteria that should exempt non-custodial staking from securities classification. These include user asset control, absence of pooled funds, permissionless unstaking, and the provision of purely technical services.
It likens non-custodial staking to proof-of-work mining, which the SEC has previously ruled out as a securities transaction.
Margaret Rosenfeld, Everstake’s chief legal officer, also told Cointelegraph that “with non-custodial staking, there’s no handover of assets, no investment contract, and no third-party risk.” She added:
“Treating it as a securities offering undermines the decentralized model and risks chilling innovation in the blockchain sector.”
Nevertheless, the SEC has so far withheld a definitive stance. Rosenfeld said that the agency did not make any “specific commitments” on staking guidance. However, it continues to listen to industry stakeholders.
“The Task Force is actively engaging with a range of stakeholders—including those involved with non-custodial staking, ETFs, and broader blockchain infrastructure—to gather input.”
In an April 30 letter to the SEC, nearly 30 crypto advocate groups led by the lobby group the Crypto Council for Innovation (CCI) asked the agency for clear regulatory guidance on crypto staking and staking services.
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