US Senators Urge SEC for Clarity on Protocol Staking in Crypto ETPs
A group of US senators, led by Cynthia Lummis, has urged the Securities and Exchange Commission (SEC) to clarify its position on protocol staking in crypto exchange-traded products (ETPs) in a Feb. 20 letter.
Seeking Answers on Exclusion of Staking from ETP Issuers’ Filings
- Lawmakers want clarity on why staking is excluded from ETP issuers’ S-1 filings.
- Exclusion impacts the competitiveness of U.S. asset managers.
- Investors are prevented from accessing core blockchain functions.
Request for Reasoning Behind SEC’s Decision
- Senators request explicit reasoning for excluding staking from digital asset ETPs.
- Three key questions posed regarding rationale, identified risks, and potential regulator stance on staking.
Importance of Transparency and Market Understanding
- Increased transparency needed for market participants to understand SEC’s regulatory position.
- Transparency can inform potential legislative action if required.
Competitive Disadvantage in the US Market
The senators argue that excluding staking limits the investment potential of US products compared to offerings in Canada, Europe, and the UK.
Impact of Staking on Blockchain Networks
- Staking is integral to PoS networks like Ethereum and Solana.
- It secures networks by locking up assets and generating rewards.
- Excluding staking from ETPs reduces investor benefits and weakens security.
Staking Discussions and Regulatory Concerns
Recent discussions with industry experts focus on integrating staking into ETP structures while addressing SEC concerns.
Proposed Models to Mitigate SEC Concerns
- Models suggest staking through third-party validators or holding liquid staking tokens.
- Examples include liquid staking derivatives like JitoSOL for Solana-based ETPs.
