SEC Staff Issues Staking Guidance

• Yesterday, the SEC’s Division of Corporation Finance issued a statement clarifying that certain “protocol staking activities” on proof-of-stake blockchain networks do not involve the offer or sale of securities.
• As a result, participants in protocol staking activities do not need to register transactions with the SEC under the Securities Act or fall within one of the Securities Act’s exemptions from registration in connection with these protocol staking activities.
• The Division’s statement offers clarity with respect to the Division’s view of certain types of common staking activities and is consistent with other recent digital asset-friendly actions taken by the SEC and other regulators. Those engaged in protocol staking activities, as well as others involved in the digital asset ecosystem, will welcome the greater legal certainty offered by the statement. The statement also imposes several limitations. Firms and other market participants should consider the implications described in this Client Memorandum.

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