Rewards and fees that network validators might receive are not yield on a loan, nor are they a dividend on investment, argued Consensys General Counsel Matt Corva and Bill Hughes, the company’s director of global regulatory matters.    

“Staking is a data integrity mechanism that Ethereum and similar blockchain networks require to function, not an investment scheme,” they added in a blog post. “Service agreements that offer technical staking solutions are not investment contracts or any other type of enumerated security.”  

Staking is a process in which crypto holders participate in validating transactions on the blockchain. In return, the block’s proposer receives a reward paid in the blockchain’s native crypto, such as ether.