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A Legal Argument for Why Staking Doesn’t Make ETH a Security

The Breakdown

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Staking ETH Does Not Satisfy the Efforts of Others Prong of Howie

Staking ETH does not satisfy the efforts of others prong of Howie. 3B1 Legal Standard According to the Supreme Court's original formulation in Howie, one of the requirements for an investment contract is that investors expect profits quote solely from the efforts of a third party. The greater the degree to which an investor relies on their own efforts for their profit, the weaker the justification to characterize the underlying transaction as an investment contract under Howie. In these cases, applying securities laws or disclosure requirements is unnecessary because there is no separation of ownership and control.

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