Everstake stated to the SEC that non-custodial staking should not be grouped as a securities transaction.
It says that non-custodial staking does not consist of assets or the presumption of profits from managerial efforts. The US Securities and Exchange Commission and Everstake are in discussions to explore clearer regulatory definitions revolving around staking and blockchain networks. Recently, both bodies held a meeting related to the Crypto Task Force of the SEC.
The meeting was followed by the staking of more than 193 billion dollars in digital assets across major proof-of-stake networks. However, after this meeting, the staking is still in a legal grey zone in the United States as regulators struggle with its clear classification that exists under securities law.
The SEC, led by the previous chairman, took enforcement actions against prominent players in the industry like Kraken, Coinbase, and Consensys because of the staking services. However, the new administration has dismissed the enforcement actions.
At the time of the meeting, Everstake stated to the SEC that non-custodial staking should not be grouped as a securities transaction. The firm revealed that users have complete control over their virtual assets during the staking process and do not share the ownership with a third party.
They also mentioned that this will make staking a technical function rather than an investment product.
Everstake Urges SEC to Recognize Non-Custodial Staking as a Technical Process
The founder of Everstake, Sergii Vasylchuk, says that the main assertion of the team is that staking is not a financial instrument or a security transaction; rather, it is a technical process. In April this year, the platform submitted a letter to the Crypto Task Force of the SEC, mentioning that elaborate regulatory clarity to non-custodial staking and custodial as well as liquid staking models.
Everstake also argued in the letter that non-custodial staking should not be classified as a securities offering. It says that non-custodial staking does not consist of assets or the presumption of profits from managerial efforts.
The users authorize only validation rights and, at the same time, maintain the ownership of their virtual assets. The staking rewards are distributed through an algorithm by the blockchain network, and the company just offers technical infrastructure.