The U.S. Securities and Exchange Commission (SEC) is facing increasing criticism from current and former officials due to its changing stance on cryptocurrency staking services.
On May 29, the SEC's Division of Corporation Finance released new guidance on cryptocurrency staking services, claiming that certain products may not constitute securities and effectively exempting proof-of-stake (PoS) blockchains from registration requirements under the Securities Act.
However, according to former SEC internet enforcement chief John Reed Stark, the SEC's latest interpretation may contradict several federal court rulings.
Stark stated on the X platform that the commission's recent actions are at odds with judicial rulings in high-profile cases against cryptocurrency exchanges Binance and Coinbase, where judges previously allowed allegations that staking products could be classified as securities based on long-standing legal precedents.
In a lengthy response to the agency, Stark wrote, "This is how the SEC dies — in plain sight." He called this shift a "shameful abandonment of its investor protection mission."
As for Binance, while the SEC alleged that the exchange's staking services constituted an unregistered securities offering, the case was ultimately dismissed in May 2025 with prejudice, preventing the agency from bringing similar allegations. Similarly, in March 2024, a federal judge allowed the case against Coinbase to proceed, noting that the SEC "adequately articulated" the issuance and sale of unregistered securities involving staking programs. This case was also dismissed in February 2025 as part of a broader shift in the SEC's approach to cryptocurrency regulation.
Current commissioner Caroline Crenshaw also issued a statement on May 29 regarding the agency's approach to cryptocurrency staking, warning that the staff's conclusions were inconsistent with established case law or the Howey test.
Crenshaw wrote, "The staff's analysis may reflect some people's expectations of the law, but it is inconsistent with court rulings on staking and the long-standing Howey precedent on which they are based." She added:
"This is yet another example of the SEC's ongoing 'pretend until you succeed' approach in the cryptocurrency space — taking action based on expectations of future changes while ignoring existing law."
The commission has recently taken a series of deregulatory measures regarding digital assets, including closing investigations, withdrawing lawsuits, and initiating roundtable discussions with industry participants about regulation.
Stark wrote, "This cryptocurrency deregulatory blitz has destroyed a once-proud 90-year legacy."
While the SEC frames its recent actions as part of an effort to provide regulatory clarity, critics argue that the result is further confusion.
In a statement on June 2, Crenshaw questioned the consistency of the commission's approach, pointing out that the agency seems to view certain digital assets, such as Ethereum (ETH) and Solana (SOL) tokens, as securities in some cases.
Crenshaw said, "How can these crypto assets not be securities in terms of registration requirements, but conveniently become securities when registrants see an opportunity to sell new products?"
At the 2025 Bitcoin Conference in Las Vegas, Nevada, commissioner Hester Peirce rebutted criticisms of the agency's new views on cryptocurrency, noting that the classification of securities transactions depends more on the nature of the transaction than on the asset itself:
"Most crypto assets, as we see today, may not themselves be securities. That doesn't mean you can't sell tokens that are not securities in a securities transaction. This is precisely where we really need to provide guidance."
Related: Thailand's SEC to block five cryptocurrency exchanges, including Bybit and OKX, on June 28
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