The Proof of Stake Alliance has revised its guidelines for staking providers.
The Proof of Stake Alliance has modified its staking principles to emphasize that providers should engage in transparent communication and refrain from controlling the liquidity requirements imposed on users.
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On November 9, the Proof of Stake Alliance (POSA), a non-profit organization representing firms in the crypto staking industry, released an updated version of its "staking principles." This alliance includes 15 firms such as Alluvial, Ava Labs, Blockdaemon, Coinbase, Credibly Neutral, Figment, Infstones, Kiln, Lido Protocol, Luganodes, Methodic, Obol, Polychain, Paradigm, and Staking Rewards.
Previous version of the POSA staking principles. Source: POSA
The staking principles, initially introduced in 2020, aim to provide industry-driven solutions for staking providers to address regulatory concerns and encourage responsible practices within the sector.
The previous version outlined guidelines that staking providers should not offer investment advice, guarantee specific staking rewards, or imply control over a protocol in their marketing materials. Instead, they should promote their products as granting access to a protocol and allowing users to enhance security. Additionally, the principles emphasized using non-financial terminology like "staking reward" in marketing, avoiding financial terms such as "interest."
The recent update introduces three new principles. Firstly, staking providers are encouraged to offer clear communication to ensure users possess all necessary information for informed decisions. Secondly, users should have the ability to determine the amount of their assets they want to stake, promoting user ownership of staked assets. Thirdly, staking providers should have explicitly delineated responsibilities and should not manage or control liquidity for users.
The crypto staking industry has faced regulatory scrutiny, with accusations of serving as a cover for issuing unregistered securities. Notably, Kraken's staking service was halted by the United States Securities and Exchange Commission on February 9, resulting in a $30 million damages order for allegedly violating securities laws. However, other staking providers, such as POSA member Coinbase, have argued that their services do not constitute securities and differ fundamentally from Kraken's offering.
