As regulators and policymakers across the federal government press forward with creating long-sought rules of the road for the cryptoasset industry, several recent developments bear particular significance for the promise of the decentralized internet, or Web3. Among these is the SEC’s announcement of the first comprehensive guidance addressing a keystone of Web3’s leading blockchain networks — the “proof-of-stake” consensus mechanism and the critical role of “staking.”
Staking activities by millions of users worldwide are integral to the functioning and security of many of the leading public blockchains networks (such as Ethereum and Solana). Participants serve as validators by locking up some of their crypto tokens in a process called staking and have the responsibility to validate transactions on and update the network — with the prospect of rewards for faithfully following the rules of the blockchain network. Millions of tokenholders participate in staking by relying on a custodian to stake tokens on their behalf or by delegating their tokens to a validator, instead of serving directly as validators. Staking is foundational to the architecture of networks employing this consensus mechanism. But during the last Administration’s regulation-by-enforcement blitz, services facilitating staking were targeted as the offerings of unregistered investment contracts under the federal securities laws, a position that threatened to imperil the future of Web3 in the United States.
In a seminal development last week, the SEC’s Division of Corporation Finance issued staff guidance dispelling that cloud over staking, announcing that there is no offer or sale of a security in the direct staking of a protocol’s native cryptoasset, nor in staking-as-a-service on behalf of others. This follows the SEC’s recent guidance that the other leading mechanism for blockchain consensus — “proof-of-work” mining (notably used by Bitcoin) — likewise does not involve the offer and sale of securities. Taken together, the SEC statements provide crucial legal clarity about the core functionality of public blockchains.
There are numerous other signs of regulatory clarity on the horizon for the cryptoasset arena, including the following:
- Bipartisan stablecoin legislation: While there remain procedural and reconciliation steps on the path to a final law, the prospect of passage of bipartisan stablecoin legislation in the Senate and the House seems favorable. It appears likely to include requirements such as full 1:1 reserves of high-quality liquid assets subject to audit, and a framework for prudential supervision. Relatedly, the SEC has stated that redeemable dollar-denominated stablecoins with 1:1 backing are not securities.
- Bipartisan market structure legislation: Last week, the House issued a bipartisan market structure bill to establish a comprehensive framework governing digital-asset markets, including (among other things) clarification that even if a cryptoasset were sold pursuant to an investment contract, the cryptoasset itself is not an investment contract; a provision for the CFTC to have jurisdiction over cryptoasset spot markets, exchanges, brokers and dealers; an exemption of certain decentralized finance (DeFi) activities relating to blockchain operations from SEC regulation; and an SEC registration exemption for token offerings raising less than $75 million in capital, subject to certain conditions (including the relevant blockchain system becoming non-controlled within four years).
- More permissive bank regulatory posture: Banking regulators have announced continued progress in their reversal of so-called “Operation Chokepoint 2.0,” including the rescission by the FDIC and the Federal Reserve of prior statements restricting banks’ ability to engage in cryptoasset-related activities.
- Binance dismissal: The SEC dismissed its civil enforcement action against the world’s largest cryptoasset exchange, completing the SEC’s pivot away from its recent enforcement-centric approach.
- Clarity for meme coins: The SEC has issued clear guidance that so-called “meme coins” are outside of the agency’s purview.
Despite these auspicious developments, some notes of caution are warranted. Even if Congress approves the stablecoin and/or market structure legislation in substantially the form proposed, there remain a host of challenging legal issues to navigate in reconciling decentralized technology with regulatory systems predicated on centralized actors, including with respect to DeFi as an alternative to intermediated financial services, tokenization of real-world assets, the functioning of decentralized autonomous organizations, and more. And even the SEC’s important statements detailed above (which do not have the force of law and could be revisited in the future) are subject to qualifications. Indeed, even as policy and regulatory progress is afoot, it is also important to be aware of the potential fragility of any bipartisan consensus in the cryptoasset domain. Activity at the state level confirms the fragility of constructive engagement with the cryptoasset industry, as particular U.S. states have resorted to initiatives that some have criticized as retrograde, including Illinois’s promulgation of a bill akin to New York’s restrictive BitLicense regime, and the Oregon attorney general’s lawsuit against Coinbase in an avowed bid to “fill [the] enforcement vacuum being left by federal regulators.”
Nevertheless, the trendline for regulatory clarity appears positive. This can be seen everywhere from burgeoning cryptoasset balances in corporate treasuries, to the quickening pace of M&A activity involving cryptoasset companies or technologies — the latter exemplified in the crypto-“TradFi” crossover in Ripple’s $1.25 billion acquisition of Hidden Road. It is essential that lawmakers and regulators focus on vindicating vital regulatory imperatives (such as investor protection and preventing illicit activity) while permitting real innovation through blockchain technologies’ distinctive attributes, which will maximize the prospects for the healthy evolution of the industry and U.S. leadership within it.
This post comes to us from Wachtell, Lipton, Rosen & Katz. It is based on the firm’s memorandum, “Cryptoasset Developments: Continued Progress Toward U.S. Regulatory Clarity,” dated June 5, 2025.