Policing Proof-of-Stake Networks

Blockchain networks have increasingly turned to proof-of-stake (“PoS”) protocols as a mechanism for discouraging bad behavior and securing participants’ data. In doing so, they not only improved their energy consumption but also increased accessibility. Still, the technological proficiency required of participants in PoS presents certain barriers inclusivity. Third-party services known staking-as-a-service (“StaaS”) providers emerged popular solution personally network. The nature this sub-contractual relationship has raised questions regarding need regulation. response regulatory concerns, some practitioners suggested that StaaS arrangements should qualify “investment contracts” per SEC v. Howey thus “securities” under Securities Act 1933. While much litigation surrounded question whether cryptocurrencies vis-à-vis initial coin offerings (“ICOs”) constitute securities, none yet addressed on within these networks. Accordingly, Note explores potential arguments favor against regulating issuers securities Howey. It argues uniqueness variations among contracts make unsuitable regulation securities. Instead, both users at large can benefit from framework tailored innovative nuanced technology.