The United States SEC's ban on CEX currency staking is a groundbreaking, positive development in the regulatory space. It is not a comprehensive regulation, but it jams a foot into the door to prepare this unregulated phenomenon for further regulatory development.
Example 1. When you lend your USD to a debtor, you receive "papers", which formalise your right to receive interest, and it's regulated by a third-party, a local government. It is trade.
Example 2. When you "lend" your USD to regulated enterprises, you receive share certificates, which formalise your right to receive profit distribution, and it's also regulated by a local government. It is trade.
Example 3. When you lend your USD to Japan and receive JPY, you also trade, but you acquire a variety of risk which is unlike either Examples 1, 2. This is currency risk, as there is no third-party regulator ... only the free market and the second-party, Japan, control the rate at which the USDJPY will trade in the future. This is a contemporary convention. Currency risk can be short-formed as fiat risk, except in cases where currencies are backed by less-fiat-like, less-arbitrary, underliers.
In general ...
... cryptocurrency trading behaves like Example 3. That is why I say, cryptocurrency is fiat, whereas each cryptocurrency's second-party is its foundational algorithm, its business logic, and the community of free agents who have de facto control over the adoption of such an algorithm.
Note however, that these free agents adopt any algorithm on a voluntary basis. Attempts to assign a legal status to such free agents therefore regard the agents as member of a cartel, decentralised association, cult, or organisation, such as one might regard the global community of vegans, or the Taliban, or Roman Catholics.
Attempts to treat cryptocurrencies as securities, such as Example 1,2, thus tend to falter because participation in cryptocurrency is largely faith-based, and extra-national. It is in fact, more isomorphic to legally regulate cryptocurrencies as religions or cults, than as stocks.
Back to the subject of "staking cryptocurrency".
First, Note1 that the function of staking is : to voluntarily assign political control, a.k.a. governmental influence, within the decentralised community of a cryptocurrency's user community.
Second, Note2 that staking in its current form, adopts a pattern of compensating (trading) that assignment of political control, with monetary gains (interest) denominated in the currency whose common voluntary usage defines each cryptocurrent community.
Regarding Note1, the business of political assignment within a cryptocurrent community is its own business. And its nation-oriented legality is simply dependent on any nation's legal encapsulation of faith-based entities.
Regarding Note2, the business of issuing interest on a currency by the issuing cryptocurrent government, is also its own business. And again, its nation-oriented legality is simply dependent on any nation's legal encapsulation of debt denominated in foreign currency.
In conclusion ...
... this discussion indicates a few obvious, if not yet important, positions :
1. Legal attention should be escalated away from cryptocurrencies per se, and refocused on their "cryptocurrent communities", i.e. the voluntary communities using each cryptocurrency.
2. Cryptocurrent communities could as easily be regulated as any other faith-based organisation. This includes their issued currencies, and any other financial instrumentation mediated in their issued currencies.
3. Cryptocurrency staking is isomorphic to, a religious community issuing an internal currency, and then issuing debt denominated in its internal currency. There are already legal frameworks to address this, and we don't need new ones.
Thanks for coming to my TED Talk 🙃.
