A Legal Argument for Why Staking Doesn’t Make ETH a Security
The Breakdown
3B22. Validators Expect to Earn Staking Rewards
Staking rewards are primarily determined by a validator's individual efforts, and not dependent on any managerial efforts of a third party. A court should find that staking fails to satisfy the Howie test because there is no common enterprise and validators are never relying on the efforts of others. The impracticality of answering these questions illustrates the flawed logic of applying securities laws to validators in the first place. They don't pose the risks that disclosures are meant to address. And again, failure to meet any of the four Howie prongs would entail that the transaction is not an investment contract and therefore not a securities transaction. But beyond the legal analysis, applying the stringent requirements mandated by US securities
