tl;dr
Representatives from several US academic institutions, including UC Berkeley, Georgetown, and the University of Chicago, met with the SEC's Crypto Task Force to discuss implementing strict rules and oversight for crypto staking. They proposed defining "staking" narrowly to apply only to protocol-lev...
Representatives from leading US academic institutions, including UC Berkeley, Georgetown, and the University of Chicago, have urged the Securities and Exchange Commission (SEC) to implement stringent regulations for cryptocurrency staking. Their proposals emphasize the need for clear definitions of staking, limiting its application strictly to protocol-level validation products, and requiring pre-approval for retail marketing. By advocating for these measures, they aim to prevent custodial yield programs from being misrepresented as core network staking.
The group recommended capping staking yields to the protocol's base reward rate and limiting intermediary fees to 5%, with the possibility of higher fees only if justified by auditable costs. They highlighted the importance of standardized disclosures within wallets and explorers, enabling users to view real-time information on yields, payouts, and slashing risks.
To enhance transparency and accountability, the advocates proposed mandatory public dashboards showing validator activity metrics such as influence, uptime, censorship behavior, and jurisdictional exposure. They also urged that all client software interacting with consensus be open source. Further, licensing requirements akin to bank oversight were recommended for entities controlling significant portions of network stake, aiming to address risks from concentrated validator power and opaque liquid-staking operations.
The SEC is currently considering these suggestions as it develops a formal regulatory framework for crypto staking, moving beyond existing exemptions that currently exclude many self-staking and non-custodial services from securities registration. This collaboration between academics and regulatory authorities signals growing attention to safeguarding retail investors and ensuring the stability of blockchain networks through precise rules, enhanced transparency, and rigorous oversight.