SEC is "very, very interested" in crypto staking, signals potential guidance
SEC seeks transparency in crypto staking, prompting engagement with industry stakeholders.
Key Takeaways
- The SEC is examining crypto staking activities and plans to issue new guidance.
- The SEC's increased interest in crypto staking includes engaging with the industry through webinars.
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The US SEC is sharpening its focus on crypto staking and may issue new guidance on the practice, FOX Business journalist Eleanor Terrett reported Thursday, citing a source who recently communicated with the securities regulator.
“The agency is “very, very interested” in staking, even asking industry for a memo detailing the different types of staking and their benefits,” Terrett shared on X.
Last week, the SEC’s Crypto Task Force met with Jito Labs and Multicoin Capital Management representatives to discuss incorporating staking features into crypto exchange-traded products (ETPs).
During their meeting, these firms presented two models for implementing staking in crypto ETPs. The Services Model would enable ETPs to stake native assets through validator service providers while maintaining timely redemptions, while the LST Model would involve ETPs holding liquid staking tokens representing staked versions of native assets.
The meeting also addressed previous concerns that led to the removal of staking features from earlier ETP applications, including redemption timing, tax implications for grantor trusts, and the classification of staking services as securities transactions.
The firms argued that preventing staking in crypto ETPs “harms investors, by crippling the productivity of the underlying asset and depriving investors of potential returns, and network security, by preventing a significant portion of an asset’s circulating supply from being staked.”
CBOE BZX Exchange recently submitted Form 19b-4 to the SEC, proposing to allow staking activities for the 21Shares Core Ethereum ETF. If approved, this would enable the ETF to generate additional returns from its Ethereum holdings, potentially increasing gains for investors.
The move marked the first such request following the SEC’s approval of spot Ethereum ETFs last year. The filing was acknowledged by the SEC on Wednesday.
Previously, 21Shares and ARK Invest attempted to launch a staked Ethereum ETF but removed the staking feature from their application. ARK Invest later withdrew from the Ethereum ETF initiative, leaving 21Shares to proceed with the 21Shares Core Ethereum ETF.
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