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Why The SEC Needs to Allow Staking in Exchange-Traded Products

Author: Content Editor
Why The SEC Needs to Allow Staking in Exchange-Traded Products
The U.S. has been falling behind other countries in staking policy, but there are efforts to change this. A bipartisan group of lawmakers is challenging the SEC's directive to exclude protocol staking in exchange-traded products (ETPs), arguing that it undermines investor protections and the competitiveness of U.S. markets. The lawmakers highlight that staking is a fundamental technical requirement for securing and validating transactions on proof-of-stake networks, and the SEC's prohibition on staking raises concerns about America's competitive position in global digital asset markets. Other major financial centers have embraced staking, recognizing its importance in network security. The impact of these regulations extends beyond Ethereum and applies to other networks that use proof-of-stake, potentially limiting the growth and competitiveness of U.S. products. The SEC's cautious stance may be disproportionate to the actual risks involved, as the technical risks associated with staking are minimal and well-understood. The letter calls for a balanced approach that permits staking in ETPs while ensuring appropriate oversight. The letter also highlights the opportunity for the SEC to assume a leadership position in protocol staking, aligning with its mandate to protect investors and maintain U.S. leadership in global financial markets. This is seen as a significant milestone for investors in the digital asset sector.

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