Charles Hoskinson Comments on SEC Staking Decision

Charles Hoskinson was pleased that the ADA staking protocol is on the network Cardano, according to federal law, does not apply to securities-related activities, Input Output CEO said after Corporate Finance Department statements US Securities and Exchange Commission (SEC).

Own staking system Cardano works as part of the blockchain’s consensus layer. It allows ADA token holders to delegate tokens to staking-pools, without transferring ownership. This process differs from liquid staking services that use third-party intermediaries.

Stakers are free to withdraw or redelegate their tokens at their discretion without any restrictions or penalties from service providers.

Hoskinson argues that staking ADA does not meet the Howey Test because users do not invest in a joint venture with the expectation of profiting from the work of others. Instead, token holders directly participate in network consensus by delegating decisions and are rewarded for their contributions to the security of the protocol.

Traditional liquid staking platforms pool user funds, take staked positions on behalf of clients, and distribute revenue based on the platform’s performance. This centralization may have implications under securities law.

Delegation mechanism Cardano circumvents this problem by directly participating in staking- pool without third party control of assets. Users retain sovereign ownership while decentralizing the network through delegation decisions.

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