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Symbolic representation of ether.
Last week, the SEC’s Crypto Task Force met with executives from Jito Labs and Multicoin Capital to discuss the possibility of adding staking as a feature in exchange-traded products. The crypto industry took note.
That’s because in recent years the U.S. Securities and Exchange Commission (SEC) has brought enforcement actions against organizations offering delegated staking and “staking-as-a-service" activities, alleging that they involve securities offerings in violation of Section 5 of the Securities Act of 1933 (the “Securities Act”).
In February 2023, the SEC charged Kraken for offering an unregistered staking-as-a-service program, resulting in a $30 million settlement and the cessation of its staking services in the U.S. In June 2023, the SEC sued Coinbase, alleging that its staking program constituted an unregistered securities offering. Last July, the SEC charged Consensys, the company behind the Metamask wallet, for unregistered offers and sales of securities related to its participation in liquid staking programs such as Lido and Rocket Pool.
But recent activities may signal a policy change is underway.
Last week’s meeting follows the proposal filed by the Cboe BZX Exchange to enable staking for the 21Shares Core Ethereum exchange-traded fund. In its filing, the Exchange requested approval to stake ether held within the fund, explaining that it will only engage in point-and-click staking and not offer staking services. A few weeks ago, Kraken resumed U.S. staking services in many U.S. states and territories.
