Everstake defends non-custodial staking as SEC weighs industry input
The US Securities and Exchange Commission (SEC) has held discussions with Everstake, one of the largest non-custodial staking providers globally, to explore clearer regulatory definitions around staking in blockchain networks.
The meeting, which also involved the SEC’s Crypto Task Force, comes at a time when over $193 billion in digital assets are staked across major proof-of-stake (PoS) networks.
However, despite the massive scale of participation, staking remains in a legal gray zone in the US as regulators wrestle with its classification under existing securities law.
The previous SEC administration also took enforcement actions against major players such as Kraken, Coinbase, and Consensys due to their staking services. The agency, under pro-crypto President Donald Trump, has recently dismissed these enforcement actions.
During the meeting, Everstake told the SEC that non-custodial staking should not be classified as a securities transaction. The company said that users maintain full control over their digital assets throughout the staking process and do not transfer ownership to a third party.
They argued that this makes staking a technical function, not an investment product.
“Our main assertion is that staking is not a financial instrument or security transaction, but rather a technical process, a base-layer protocol mechanism—akin to an oracle in a database—that maintains the integrity and functionality of decentralized networks,” Everstake founder Sergii Vasylchuk told Cointelegraph.
Related: SEC delays staking decision for Grayscale ETH ETFs
Everstake calls for regulatory clarity
In a letter submitted to the SEC’s Crypto Task Force on April 8, 2025, Everstake asked the agency to extend regulatory clarity to non-custodial staking and custodial and liquid staking models.
In the letter, which came in respond to Commissioner Hester Peirce’s call for input on regulatory treatment of blockchain services, Everstake argued that non-custodial staking should not be considered a securities offering.
It claimed that non-custodial staking, where users retain control of their tokens, does not involve the pooling of assets or the expectation of profits from managerial efforts.
In its model, Everstake said users delegate only validation rights while maintaining ownership of their digital assets. The staking rewards are algorithmically distributed by the blockchain network itself, and the firm merely provides technical infrastructure.
Related: Ethereum ETF staking will have little impact without multimonth rally: Analyst
Non-custodial staking fails the Howey test
The letter also details why non-custodial staking fails each prong of the Howey test. Users do not make an investment of money in a common enterprise, do not expect profits from Everstake’s efforts, and are not dependent on the company’s management for financial returns.
Instead, any rewards come from network-level incentives and fluctuate with the market value of the underlying asset.
Everstake proposes specific criteria that should exempt non-custodial staking from securities classification. These include user asset control, absence of pooled funds, permissionless unstaking, and the provision of purely technical services.
It likens non-custodial staking to proof-of-work mining, which the SEC has previously ruled out as a securities transaction.
Margaret Rosenfeld, Everstake’s chief legal officer, also told Cointelegraph that “with non-custodial staking, there’s no handover of assets, no investment contract, and no third-party risk.” She added:
“Treating it as a securities offering undermines the decentralized model and risks chilling innovation in the blockchain sector.”
Nevertheless, the SEC has so far withheld a definitive stance. Rosenfeld said that the agency did not make any “specific commitments” on staking guidance. However, it continues to listen to industry stakeholders.
“The Task Force is actively engaging with a range of stakeholders—including those involved with non-custodial staking, ETFs, and broader blockchain infrastructure—to gather input.”
In an April 30 letter to the SEC, nearly 30 crypto advocate groups led by the lobby group the Crypto Council for Innovation (CCI) asked the agency for clear regulatory guidance on crypto staking and staking services.
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Thousands more Afghan nationals may have been affected by another data breach, the government has said.
Up to 3,700 Afghans brought to the UK between January and March 2024 have potentially been impacted as names, passport details and information from the Afghan Relocations and Assistance Policy has been compromised again, this time by a breach on a third party supplier used by the Ministry of Defence (MoD).
This was not an attack directly on the government but a cyber security incident on a sub-contractor named Inflite – The Jet Centre – an MoD supplier that provides ground handling services for flights at London Stansted Airport.
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July: UK spies exposed in Afghan data breach
The flights were used to bring Afghans to the UK, travel to routine military exercises, and official engagements. It was also used to fly British troops and government officials.
Those involved were informed of it on Friday afternoon by the MoD, marking the second time information about Afghan nationals relocated to the UK has been compromised.
It is understood former Tory ministers are also affected by the hack.
Earlier this year, it emerged that almost 7,000 Afghan nationals would have to be relocated to the UK following a massive data breach by the British military that successive governments tried to keep secret with a super-injunction.
Defence Secretary John Healey offered a “sincere apology” for the first data breach in a statement to the House of Commons, saying he was “deeply concerned about the lack of transparency” around the data breach, adding: “No government wishes to withhold information from the British public, from parliamentarians or the press in this manner.”
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July: Afghan interpreter ‘betrayed’ by UK govt
The previous Conservative government set up a secret scheme in 2023 to relocate Afghan nationals impacted by the data breach, but who were not eligible for an existing programme to relocate and help people who had worked for the British government in Afghanistan.
The mistake exposed personal details of close to 20,000 individuals, endangering them and their families, with as many as 100,000 people impacted in total.
Read more on Sky News:
Data breach victims sent spam emails
Afghan data leak timeline
MoD urged to reveal details of nuclear incident
A government spokesperson said of Friday’s latest breach: “We were recently notified that a third party sub-contractor to a supplier experienced a cyber security incident involving unauthorised access to a small number of its emails that contained basic personal information.
“We take data security extremely seriously and are going above and beyond our legal duties in informing all potentially affected individuals. The incident has not posed any threat to individuals’ safety, nor compromised any government systems.”
In a statement, Inflite – The Jet Centre confirmed the “data security incident” involving “unauthorised access to a limited number of company emails”.
“We have reported the incident to the Information Commissioner’s Office and have been actively working with the relevant UK cyber authorities, including the National Crime Agency and the National Cyber Security Centre, to support our investigation and response,” it said.
“We believe the scope of the incident was limited to email accounts only, however, as a precautionary measure, we have contacted our key stakeholders whose data may have been affected during the period of January to March 2024.”
BitMine and SharpLink are raising over $25 billion to expand Ether treasuries as US debt hits $37 trillion, fueling bullish crypto market sentiment.
The Federal Reserve said it would sunset a program specifically to monitor banks’ digital assets activities and would integrate them back into its “standard supervisory process.”
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