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Swiss FINMA has introduced a conditional framework allowing licensed entities to offer direct crypto staking services, emphasizing strict segregation, transparency, and risk mitigation.
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The US SEC clarifies that solo and custodial staking generally do not constitute securities under the Howey test, framing these activities as administrative rather than investment contracts.
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Despite differing regulatory focuses—prudential oversight in Switzerland and securities law in the US—both authorities provide clearer compliance pathways supporting staking operations.
Swiss FINMA and US SEC provide distinct yet complementary regulatory frameworks clarifying crypto staking compliance, enhancing operational security and legal certainty.
Swiss FINMA’s Prudential Approach to Crypto Staking Compliance
In its Guidance 08/2023, the Swiss Financial Market Supervisory Authority (FINMA) sets forth a pragmatic regulatory approach to crypto staking, focusing on prudential oversight and risk management. This guidance follows Switzerland’s enactment of the Distributed Ledger Technology (DLT) Act, which frames the legal landscape for digital assets.
FINMA’s primary concern is whether staked cryptoassets can be distinctly segregated from a custodian’s estate in bankruptcy scenarios. The regulator recognizes the inherent complexities due to staking lock-up periods and slashing risks, which introduce legal ambiguities regarding asset segregation.
Rather than imposing prohibitions, FINMA’s interim practice permits licensed institutions to offer direct staking services without capital requirements on staked assets, provided they adhere to stringent conditions:
- Customers must give explicit instructions on the type and quantity of cryptoassets to stake.
- Institutions must ensure clear, unambiguous allocation of staked assets to individual customers.
- Full transparency regarding risks—including slashing, lock-up durations, and legal uncertainties—is mandatory.
- Operational risks related to validator node management must be actively mitigated to prevent penalties.
- A Digital Assets Resolution Package (DARP) must be prepared to facilitate asset recovery by liquidators efficiently.
This framework offers Swiss-regulated entities a clear, responsible pathway to engage in staking services while safeguarding customer assets and maintaining regulatory compliance.
Operational and Legal Nuances in FINMA’s Staking Framework
FINMA’s guidance highlights the dual challenge of balancing innovation with prudential safeguards. The requirement for a DARP, for example, underscores the regulator’s focus on crisis preparedness and asset recovery mechanisms. Additionally, the emphasis on customer instructions and transparent risk disclosures reflects a commitment to consumer protection within a complex technical environment.
By addressing these operational and legal nuances, FINMA effectively reduces uncertainty for market participants, enabling them to integrate staking into their service offerings with confidence and regulatory backing.
US SEC’s Securities Law Analysis of Protocol Staking
The US Securities and Exchange Commission (SEC), through its Division of Corporation Finance, issued a pivotal statement in May 2024 clarifying the application of federal securities law to crypto staking activities. The analysis centers on the Howey test, which determines whether an activity qualifies as an investment contract and thus a security.
The SEC staff concluded that protocol staking activities generally do not meet the “efforts of others” criterion essential to the Howey test. This distinction is based on the administrative nature of node operators’ roles, which involve validation services rather than entrepreneurial or managerial efforts driving profits.
This interpretation applies to various staking models, including:
- Self (solo) staking, where operators stake their own assets.
- Self-custodial staking with third-party validators, where asset owners retain custody but delegate validation rights.
- Custodial staking arrangements where custodians act strictly as agents without discretionary control over staking decisions.
The SEC staff also clarified that ancillary services like slashing coverage or asset aggregation do not transform staking into a securities offering. However, this guidance is a staff statement and does not constitute formal Commission rules, nor does it address more complex structures such as liquid staking.
Implications of the SEC’s Staking Clarification for US Market Participants
This clarification provides much-needed regulatory certainty, allowing crypto firms to structure staking offerings in a manner that mitigates securities law risks. By emphasizing the administrative nature of staking, the SEC staff encourages transparent, non-discretionary operational models that align with existing securities frameworks.
Market participants are advised to carefully design staking programs to ensure custodianship and decision-making remain clearly defined, reducing the likelihood of regulatory scrutiny or enforcement actions.
Comparative Insights and Market Impact
The regulatory approaches of FINMA and the SEC, while distinct in focus, collectively advance the maturity of crypto staking compliance globally. FINMA’s prudential framework prioritizes operational risk management and asset segregation, whereas the SEC’s securities law analysis centers on investor protection and the classification of staking activities.
For stakeholders, these developments signal a growing acceptance of staking as a fundamental blockchain function, supported by evolving legal clarity. Entities operating across these jurisdictions can leverage these frameworks to build compliant, secure staking services that foster trust and innovation.
Strategic Considerations for Crypto Firms
Crypto firms should consider the following strategic actions in light of these regulatory updates:
- Implement robust operational controls and transparent customer communications to meet FINMA’s prudential requirements.
- Structure staking offerings to maintain administrative roles and avoid discretionary decision-making to align with SEC guidance.
- Monitor ongoing regulatory developments, particularly regarding complex staking products like liquid staking, which remain less defined.
Proactive compliance and clear governance will be essential to capitalize on the opportunities presented by these regulatory clarifications.
Conclusion
The recent regulatory clarifications from Swiss FINMA and the US SEC mark a significant milestone in the evolution of crypto staking oversight. By providing distinct but complementary frameworks, they enhance legal certainty and operational security for market participants. These developments enable compliant staking services that support blockchain network integrity while protecting investors and customers. As the digital asset ecosystem continues to grow, adherence to these guidelines will be critical for sustainable innovation and regulatory harmony.
