Charles Hoskinson, CEO of Cardano’s research and development firm Input | Output, firmly stated that ADA staking does not qualify as a security. He made this statement in response to the SEC’s Division of Corporation Finance’s latest press release on liquid staking.
In its announcement, the SEC defined liquid staking as staking crypto through a service provider or software protocol while receiving a receipt that represents staked assets and expected rewards. After analyzing the process, the division concluded that liquid staking does not constitute the offer or sale of securities. As a result, liquid staking activities themselves are not considered securities.
Hoskinson Reacts to SEC’s Guidance
Following the release, Hoskinson highlighted that ADA staking is not a security. He accompanied his statement with a GIF of a laughing man, showing satisfaction with the SEC’s stance on crypto staking.
Cardano operates a native staking system integrated into its consensus layer. This model allows ADA holders to delegate their tokens to staking pools and earn rewards. Importantly, the staking process does not meet the Howey Test’s criteria for a security.
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Users do not “invest funds” in a “common enterprise” or “expect profits solely from others’ efforts.” Instead, they delegate ADA to secure the blockchain and validate transactions. Rewards stem from network participation, not profit-sharing from an organization.
SEC’s Project Crypto Initiative
The clarification forms part of the SEC’s Project Crypto, a new initiative aimed at modernizing securities regulations and transitioning U.S. markets to blockchain systems. Less than a week after its launch, Chairman Paul Atkins announced early results, citing the liquid staking clarification as progress.
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Atkins reaffirmed that the SEC aims to provide clear, consistent guidelines for applying federal securities laws to digital assets and emerging technologies.
With the SEC clarifying liquid staking rules, Hoskinson reassures the Cardano community that ADA’s built-in staking model remains outside federal securities laws. This development strengthens confidence in Cardano’s staking system and its role in blockchain security.
