The Proof of Stake Alliance revealed that it is taking critical steps toward improving the regulatory space around the Staking-as-a-Service (STaaS) market, including dialogues with the U.S. Securities and Exchange Commission.
According to the announcement, the POSA met with the SEC to discuss increasing adoption of Proof-of-Stake (PoS) protocols — a successor to Bitcoin’s (BTC) Proof-of-Work consensus protocol that is perceived to be more efficient and scalable.
Staking allows token holders to earn interest on locked amounts of a network's native token, which in turn supports the network's overall efficiency.
The POSA submitted a white paper containing a legal analysis from the international law firm Paul Hastings LLP and said the dialogue “concerning the legal analysis” was ongoing.
Progress reported at SEC meetings
The meetings with the SEC were held in February to educate the agency about PoS technology and discuss a regulatory framework for STaaS offerings.
The POSA previewed a set of industry-driven standards that aim to get ahead of potential regulatory concerns, including asking STaaS providers to refrain from investment advice, avoid financial industry terminology (such as "interest," "dividend" or "yield"), focus on security and participation in the network, and avoid providing guarantees regarding reward amounts.
Evan Weiss, the president and founder of the POSA, told Cointelegraph that he was “extremely impressed” with the understanding the SEC has of staking, adding:
“We are grateful that they have taken the time to meet with us and start a dialogue around how staking can be successful here in the U.S. We see this discussion as an on-going opportunity to learn from each other, to help ensure that staking-based protocols have the potential to flourish here in the U.S. while also ensuring that consumers and token-holders are protected.”
Bryce Ferguson, product manager at Coinbase Custody said, "It’s critical that the industry has an open dialogue with regulators, and that staking service providers abide by certain standards. By acting together, industry players can help ensure that Proof of Stake networks continue to flourish.”
Cointelegraph reported on January 30 that Coinbase Custody and Bison Trails have joined the ranks of the POSA, advocating for the adoption of clear regulations on staking proceeds, among other initiatives.