Updated Recommendations for Staking Providers by Proof of Stake Alliance

The Proof of Stake Alliance (POSA) Updates Staking Principles

The Proof of Stake Alliance (POSA) recently released an updated version of its “staking principles” on Nov. 9. POSA represents 15 firms in the staking industry, including Alluvial, Ava Labs, Blockdaemon, Coinbase, Credibly Neutral, Figment, Infstones, Kiln, Lido Protocol, Luganodes, Methodic, Obol, Polychain, Paradigm, and Staking Rewards.

Industry-Driven Solutions for Responsible Practices

The staking principles were initially published in 2020 as a set of industry-driven solutions to address regulatory concerns and promote responsible practices in the staking industry. The principles emphasize that staking providers should refrain from offering investment advice or guaranteeing specific staking rewards. Instead, they should focus on providing access to protocols and enhancing security while using non-financial terminology in their marketing materials.

Updates to Staking Principles

The updated version includes three new principles. First, it encourages clear communication to ensure users have the necessary information to make informed decisions. Second, it promotes user ownership of staked assets by allowing users to decide how much of their assets they want to stake. Third, it emphasizes explicitly delineated responsibilities and prohibits staking providers from managing or controlling liquidity for users.

Regulatory Scrutiny and Industry Response

The crypto staking industry has faced criticism from regulators who allege that it serves as a front for issuing unregistered securities. In response to regulatory actions against some staking services, including Kraken’s shutdown by the SEC and subsequent damages payment, other providers have defended the distinction between their services and securities.

Hot Take: A Step Towards Regulatory Compliance

The updated staking principles from POSA reflect a proactive effort by industry stakeholders to address regulatory concerns and promote responsible practices within the staking industry. By emphasizing clear communication, user ownership of assets, and delineated responsibilities for staking providers, these principles aim to foster transparency and compliance while navigating regulatory scrutiny.