The Proof-of-Stake Alliance (POSA), a non-profit organization representing 15 companies in the cryptocurrency staking industry, released an updated version of its "Staking Principles" on November 9. The member companies include Alluvial, Ava Labs, Blockdaemon, Coinbase, Credively Neutral, Figment, Infstones, Kiln, Lido Protocol, Luganodes, Methodic, Obol, Polychain, Paradigm, and Stake Rewards. These principles, first published in 2020, aim to provide industry-driven solutions for addressing regulatory concerns and promoting responsible practices within the staking sector.
The original principles outlined guidelines for staking providers, emphasizing the avoidance of providing investment advice, guaranteeing staking rewards, or implying control over the protocol in marketing materials. Instead, providers were encouraged to promote their products as offering access to the protocol and enhancing user security. Financial terms such as "interest" were discouraged in favor of non-financial terms like "staking rewards." The updated principles, announced on November 9, introduce three new guidelines.
Firstly, staking providers are encouraged to offer clear communication, ensuring users have comprehensive information for informed decision-making. Secondly, users should have the ability to decide the extent of their assets to stake, promoting user interest and ownership of their staked assets. Thirdly, staking providers should have clearly defined responsibilities, avoiding the management or control of liquidity to obtain pledged assets.
The cryptocurrency staking industry has faced regulatory scrutiny, with accusations of operating as a front for issuing unregistered securities. Kraken's staking service, for instance, was ordered to shut down by the U.S. Securities and Exchange Commission (SEC) on February 9, resulting in a $30 million penalty for alleged securities law violations. While some regulators view staking services as potential securities, providers like Coinbase argue that their offerings are fundamentally different, and thus, do not violate securities laws.
