The U.S. Securities and Exchange Commission (SEC) is under increasing internal and external scrutiny after issuing new guidance that softens its stance on crypto staking services. On May 29, the SEC’s Division of Corporation Finance declared that certain staking services may not be considered securities—effectively exempting some proof-of-stake blockchain offerings from Securities Act registration requirements.
Ex-Officials Say SEC Is Contradicting Itself
Former SEC officials have not held back their criticism. John Reed Stark, the agency’s former chief of Internet Enforcement, slammed the move on X (formerly Twitter), claiming it directly conflicts with judicial rulings in landmark crypto cases involving Binance and Coinbase.
“This is how the SEC dies – in plain view,” Stark wrote, branding the change “a shameful abdication” of the agency’s investor protection mission.
Stark pointed out that federal judges had previously ruled that staking services could qualify as unregistered securities. In the case against Binance, the SEC initially accused the exchange of offering unregistered staking services, though the case was dismissed with prejudice in May 2025. Similarly, a federal judge allowed the SEC’s case against Coinbase to proceed in 2024, stating that the agency had sufficiently argued that the staking program involved securities. That case, too, was ultimately dismissed in early 2025, reflecting the agency’s shifting enforcement strategy.
Commissioner Crenshaw Warns of Legal Disconnect
SEC Commissioner Caroline Crenshaw echoed concerns over the May 29 guidance, warning that the staff’s conclusions are inconsistent with legal precedent. In a public statement, Crenshaw cited the Howey test—the traditional standard for defining securities—as being disregarded in the new interpretation.
“The staff’s analysis may reflect what some wish the law to be, but it does not square with the court decisions on staking and the longstanding Howey precedent,” she said. Crenshaw added that the agency’s approach represents a “fake it till we make it” mentality that undermines regulatory credibility.
Deregulatory Momentum Raises Alarm Bells
The SEC has recently taken a series of deregulatory actions, including closing crypto-related investigations, dropping lawsuits, and engaging in roundtable discussions with industry stakeholders. Stark labeled the moves a “crypto-deregulatory blitzkrieg,” saying it has “destroyed a once-proud 90-year legacy.”
Clarity or Confusion? Commissioners Split
While the SEC maintains that its recent actions aim to offer regulatory clarity, critics argue they have only deepened confusion. In a June 2 statement, Crenshaw questioned the agency’s consistency in its treatment of digital assets like Ether (ETH) and Solana (SOL), noting that these tokens are inconsistently classified depending on the context.
“How is it that these crypto assets are supposedly not securities when it comes to registration requirements, but conveniently are securities when a registrant sees an opportunity to sell a new product?” she asked.
Peirce Advocates for Nuanced Interpretation
At the Bitcoin 2025 conference in Las Vegas, Commissioner Hester Peirce defended the SEC’s evolving stance, suggesting that the nature of a transaction, not the token itself, determines whether it qualifies as a securities offering.
“Most crypto assets, as we see them today, are probably not themselves securities,” Peirce said. “That doesn’t mean that you can’t sell a token that is not itself a security in a transaction that is a securities transaction. That is where we really need to provide some guidance.”
