European Blockchain Association - New Position Paper "Towards a reliable taxonomy and understanding of Proof-of-Stake"
27 September 2023
The need for regulatory clarity and harmonisation in the blockchain space has never been more pressing. As blockchain technology continues to evolve, and its applications expand across sectors, the absence of clear regulatory guidelines is a major impediment to innovation and growth. Inconsistent regulations across jurisdictions not only create a complex, fragmented landscape that is difficult to navigate but also pose significant compliance challenges for blockchain-based projects and their customers.
This uncertainty often stifles innovation and deters investors, creating a chilling effect on the industry. Moreover, the lack of harmonised regulations could inadvertently encourage regulatory arbitrage, where entities might relocate to jurisdictions with perceived lenient regulations. A term that has recently gained particular significance in this context is that of "staking". To date, there is no uniform consensus on how this process and its various manifestations are to be defined in concrete terms, which has led to legal uncertainty, sometimes with considerable consequences. The importance of finding consensus among European Union Member States was recently demonstrated, in particular, by the discussions around “DAC8” (Directive amending Directive 2011/16/EU on administrative cooperation in the field of taxation) which, prior to its adoption, referred to the term “staking” as a "crypto-asset service", thereby establishing it as one of the various requirements for compliance with the reporting obligations provided for therein. Although this approach was (fortunately) dropped last minute due to a lack of consensus on what should even be considered staking, these discussions have highlighted the need for swift clarification, most notably to ensure sufficient legal certainty and clarity in the European Union.
For these reasons, some of the leading stakeholders in the blockchain space have decided to jointly draft this position paper – with the aim of not only making a clear distinction between staking and lending depending on the actual underlying technical process, but also to differentiate between the different types of staking. We hope to be able to provide a valuable contribution and a basis for the upcoming discussions in this regard.
Find out more and download the paper here.