The US Securities and Exchange Commission (SEC) recently engaged in discussions with Everstake, a prominent non-custodial staking provider, to address regulatory uncertainties surrounding staking in blockchain networks. At present, over $193 billion worth of digital assets are staked across various proof-of-stake (PoS) networks, highlighting the significant involvement in staking activities. Despite this, staking operations in the US are navigating a legal gray area as regulators grapple with categorizing them under existing securities laws. Notably, the previous SEC administration took enforcement actions against industry giants like Kraken, Coinbase, and Consensys over their staking services. However, under the current pro-crypto leadership, these actions have been set aside. During the discussions with the SEC, Everstake emphasized that non-custodial staking should not be viewed as a securities transaction since users retain full control over their assets throughout the process without transferring ownership to a third party. The company argued that staking is essentially a technical function rather than an investment product, likening it to a database oracle that upholds decentralized network integrity. Everstake has called for regulatory clarity in a letter to the SEC’s Crypto Task Force, asserting that non-custodial staking should not be classified as a securities offering due to the absence of pooled assets or profit expectations from managerial efforts. The company’s model involves users delegating validation rights while retaining asset ownership, with staking rewards distributed algorithmically by the blockchain network itself. Everstake also highlighted that non-custodial staking does not meet the criteria of the Howey test, which assesses securities transactions. The company proposed specific criteria for exempting non-custodial staking from securities classification, emphasizing user asset control, absence of pooled funds, permissionless unstaking, and the provision of technical services. Despite the ongoing discussions, the SEC has yet to provide a definitive stance on staking guidance, although it is engaging with various industry stakeholders to gather input. In a related development, nearly 30 crypto advocacy groups urged the SEC for clear regulatory guidance on crypto staking and related services. The industry awaits further clarity from the SEC on the regulatory treatment of staking activities to ensure continued innovation in the blockchain sector.