Everstake defends non-custodial staking as the SEC weighs the input of the industry
The US Securities and Exchange Commission (SEC) conducted discussions with Everstake, one of the largest non-custodial staking providers in the world, to explore the clearer definitions of regulation around staking on blockchain networks.
The meeting, also involved in the SEC’s Crypto Task Force, arrived at a time more than $ 193 billion in digital assets was staked throughout the main Proof-of-Stake (POS) Networks.
However, despite the massive size of participation, staking remains in a legal color -aboard zone in the US as regulators wrestle with its classification under existing security law.
The previous SEC administration also conducted implementation actions against major players such as Kraken, Coinbase, and Consensys because of their staking services. The agency, under pro-crypto president Donald Trump, recently removed these actions.
During the meeting, Everstake told the SEC that non-custodial staking should not be classified as a security transaction. The company said users maintain full control over their digital assets throughout the staking process and not move the owner to a third party.
They argued that it was staking a technical function, not an investment product.
“Our main consideration is that staking is not a financial instrument or security transaction, but rather a technical process, a base-layer protocol mechanism-bound to an oracle in an database-which maintains the integrity and function of decentralized networks,” the founder of Everstake Sergii Vasylchuk told cointelegraph.
Related: SEC has delayed staking decision for Grayscale ETH ETFS
Everstake calls for regulation clarity
In a letter submitted to the SEC’s Crypto Task Force on April 8, 2025, Everstake asked the agency to expand the clarity of regulation in non-custodial staking and custodial and liquid staking models.
In the letter, who came to the response Commissioner Hester Peirce’s Calling for the input to treat the regulation of blockchain services, Everstake argued that non-staking non-preservation should not be considered security offer.
It claims that non-custodial staking, in which users maintain control of their tokens, is not involved in the pooling of properties or the hope of income from management efforts.
In its model, Everstake said users only dedicate validation rights while maintaining the owner of their digital assets. Staking rewards are algorithmically distributed by the blockchain network itself, and the firm only provides technical infrastructure.
Related: Ethereum ETF Staking will have little effect without multimonth rally: Analyst
Non-Custodial Staking failed in Howey Test
The letter is also detailed as to why non-custodial staking failed in every prong of The test of Howey. Users do not make a money investment in a common business, income does not expect Everstake’s efforts, and does not depend on the management of the company for financial return.
Instead, any rewards come from network level incentives and have changed the value of the underlying owner market.
Everstake recommends specific criteria that should exempt the non-preservation of staking from security sorting. This includes control asset control, lack of pooled funds, without permission without consumption, and the provision of technical services.
It compares to non-proof-of-work mining preservation, which the SEC has previously ruled as a security transaction.
Margaret Rosenfeld, chief legal everstake officer, also told cointelegraph that “with non-custodial staking, no property handover, no investment contract, and no third-party risk.” He added:
“Treatment of it as a security offer exacerbates the decentralized model and risks of chicking a change in the blockchain sector.”
However, the SEC has been to this day to hold a certain stance. Rosenfeld said the agency did not make any “specific promises” in the staking guide. However, it continues to listen to industry stakeholders.
“The Task Force is actively interacting with a set of stakeholders-including those involved in non-custodial staking, ETFs, and greater blockchain infrastructure-to gather input.”
In a letter on April 30 in the SEC, nearly 30 crypto advocates led by the lobby group The Crypto Council for Innovation (CCI) agency question for clear regulation guide in crypto staking and staking services.
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