The staking craze on Wall Street

Source: TOKEN DISPATCH

Compilation: Vernacular Blockchain

In 1688, captains gathered at Edward Lloyd's coffee house in London in search of those willing to insure their voyages. Wealthy merchants would sign their names beneath the details of the ships, becoming "underwriters," using their personal wealth to guarantee these high-risk voyages.

The more reputable the underwriter, the higher the safety of the entire voyage. The more secure the system, the more business it attracts. This is a simple transaction: provide capital, reduce risks for everyone, and earn profit sharing.

Reading the new guidance from the U.S. Securities and Exchange Commission (SEC), it is clear that cryptocurrency is merely a digitalization of the model invented by café underwriters—people earn returns by putting assets at risk, thereby making the entire system safer and more trustworthy.

Staking. Yes, it's back.

On May 29, 2025, everything changed. That day, the U.S. government made it clear that staking would not land you in legal trouble. First, let's review why this is so important right now.

In staking, you lock up TOKEN to help secure the network and earn stable returns.

Validators use staked Tokens to verify transactions, propose new blocks, and keep the blockchain running smoothly. In return, the network pays them with newly minted Tokens and transaction fees.

Without stakers, proof-of-stake networks like Ethereum will collapse.

Of course, you can stake TOKEN, but no one knows if the SEC will one day come knocking, claiming that you are conducting an unregistered securities offering. This regulatory uncertainty forces many institutions to stay on the sidelines, enviously watching retail stakers earn annual returns of 3-8%.

Large Staking Craze

On July 3, Rex-Osprey Solana + Staking ETF officially launched, becoming the first fund in the United States to provide direct exposure to cryptocurrencies and include staking rewards. The fund holds SOL through its Cayman subsidiary and uses at least half of its holdings for staking.

"The first staking crypto ETF in the United States," announced Rex Shares.

They are not the only ones.

Robinhood has just launched a crypto staking service for U.S. customers, initially supporting Ethereum and Solana. Kraken has added Bitcoin staking through the Babylon protocol, allowing users to earn rewards while holding BTC on the native chain.

VeChain has launched a $15 million StarGate staking program. Even Bit Digital has abandoned its entire Bitcoin mining business to focus on Ethereum staking.

What changes have occurred now?

Two Major Regulatory Breakthroughs

First, the SEC's staking guidance issued in May 2025.

It clearly states that if you stake your cryptocurrency to help operate the blockchain, it is completely legal and not considered a high-risk investment or security.

This covers personal staking, delegating Tokens to others, or staking through trusted trading platforms, as long as your staking directly supports the network. This will exclude most staking activities from the "investment contract" definition in the "Howey test." This means you no longer need to worry about accidentally violating complex investment regulations due to staking and earning rewards.

The only warning is that anyone who promises guaranteed profits, especially if they mix staking with borrowing, or uses fancy terms like "DeFi bundle guaranteed returns" or "yield farming," may run into problems.

Second, the CLARITY Act.

This is a bill introduced in Congress aimed at clarifying which government agency is responsible for regulating different digital assets. It specifically protects those who operate nodes, stake, or use self-custody wallets, ensuring they are not viewed as Wall Street brokers.

The bill introduces a new category of digital goods called "investment contract assets" and establishes standards for digital assets to be classified as securities (regulated by the SEC) or commodities (regulated by the CFTC). The bill also sets a process for the "maturity" of blockchain projects or Tokens, allowing them to transition from SEC regulation to CFTC regulation, and sets a time limit for SEC review to avoid indefinite delays.

So, what does this mean for you?

Now, you can stake cryptocurrencies in the United States with more confidence, thanks to the SEC's guidance. If the CLARITY Act passes, staking and participating in cryptocurrencies will become simpler and safer.

Staking rewards are still subject to ordinary income tax when you gain "dominion and control" over them, and if you later sell the rewards for a profit, you will owe capital gains tax. All staking income, regardless of amount, must be reported to the IRS.

Who is the focus? Ethereum.

No, the price is still around $2500.

@Beeple

Although the price is not stunning, the staking data of Ethereum shows a significant change. The amount of staked ETH has reached a historical high, exceeding 35 million, accounting for nearly 30% of the total circulation. Although this trend has persisted for several months, these infrastructures have suddenly become more important now.

@Dune

What's happening in the corporate boardroom?

BitMine Immersion Technologies has just raised $250 million to purchase and stake Ethereum, with Fundstrat's Tom Lee serving as its chairman. The company bets that staking rewards, combined with potential price appreciation, will outperform traditional government bond assets.

SharpLink Gaming's doubling down strategy has expanded its ETH treasury to 198,167 tokens, and they are staking 100% of their holdings. In just one week in June, they earned 102 ETH in staking rewards. By simply locking up tokens, you can obtain free funds.

At the same time, Ethereum ETF issuers are lining up for staking approval. Bloomberg analysts predict that the probability of staking ETFs receiving regulatory green lights in the coming months is as high as 95%. BlackRock's head of digital assets called staking a "significant transformation" for Ethereum ETFs, and he might not be wrong.

If approved, these staking ETFs could reverse the outflow of funds that has plagued Ethereum funds since their launch. Since it is possible to gain both price exposure and yield at the same time, why settle for just price exposure?

@VitalikButerin

speaking the language of Wall Street for cryptocurrency

For many years, traditional finance has struggled to understand the value proposition of cryptocurrencies. Digital gold? Maybe. Programmable money? Sounds complicated. Decentralized applications? What's wrong with centralized applications?

But what about returns? Wall Street understands returns. Of course, bond yields have rebounded from near-zero lows in 2020, with the 1-year Treasury yield around 4%. But a regulated crypto fund can generate annual staking returns of 3-5% by securing the network while also providing potential upside for the underlying assets? This looks very attractive.

This is about legitimacy. It is a big deal when pension funds can gain exposure to Ethereum through regulated ETFs and earn returns through protected networks.

The network effect has already emerged. As more institutions participate in staking, the network becomes more secure. The more secure the network, the more users and developers it attracts. As adoption increases, transaction fees rise, and staking rewards grow accordingly. This is a virtuous cycle that benefits all participants.

You don't need to understand blockchain technology or believe in decentralization to appreciate an asset that pays rewards for holding it. You don't need to subscribe to Austrian economics or distrust central banks to appreciate a productive capital. You just need to understand that networks need security, and security providers deserve to be compensated.

That's all for today. See you next week for another in-depth discussion.

By then... hold tight (hodl tight).

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