Staking ETH pays interest, so buying ETH is buying an interest-bearing asset (i.e. a security). Some of the biggest players in staking will be exchanges who will likely give some (most) of the interest they earn to their depositors.
Those exchanges are then a ripe target for existing securities regulation, and they'll also be the biggest validators on the network, so risk for them is risk for the whole network.
> Those exchanges are then a ripe target for existing securities regulation, and they'll also be the biggest validators on the network, so risk for them is risk for the whole network.
This. Of all comments this is the centralization risk on top of proof-of-stake which will have a more involved focus on staking with it being highly likely that it now passes the Howey test that ETH looking more like a security, with the Ethereum Foundation at the center of all of this.
As far as I understand, without any work (energy consumption) that is directly tied to the value of the asset, there's no argument left for it to be a currency, i.e. it can only be categorised as a security asset.
Buying Eth: No investment in a common enterprise, no expectation of profit nor is that non-profit derived from others. Not a security.
Staking Eth: Investment in common enterprise, expectation of profit and profit derived from others. Looks and quacks like a security.
Buying and holding Eth without staking it shouldn't be considered a security, while staking said Eth should be considered a security. At least if we're still following the "Howey Test".
If there were two tokens, one of which was stakeable and the other not, traded separately but convertible, then sure. But that's not reality. ETH's value is in part defined by its ability to bear interest. Whether you personally stake or not has no bearing on whether your ETH is a security.
Staked ETH derives profit from your own effort. You have to buy equipment (consumer-grade computer), pay for internet and energy costs to have it plugged and put your own effort in maintaining it online, operational and secure. This is basically a side-job for techies but a side-job in the end. Staked ETH rewards are thus not passive income and staked ETH is not a security. In a similar manner that rental income is taxed as income and a landowner that rents an appartment is not issuing an illegal security.
A different thing is what happens with a liquid staking token like stETH, a much better argument can be made that it quacks and walks like a security.
The profit is to be derived from the efforts of others. People staking at this point are entirely dependent on the Foundation to add the ability to withdraw your staked ETH. Do stakers expect to make a profit if the Foundation doesn't add this feature?
Those things are not as coupled as you make them sound: the vast majority of people getting paid interest on their ETH won't be running a node. They'll be receiving interest passed on by exchanges or other centralised entities that are staking their ETH.
And if those entities give them some kind of token they can trade around, giving them rights to their deposit plus some profits, that token might well be a security.
But if I loan you dollars and you promise to do something profitable and give me more dollars back, that doesn't make the dollar a security.
Those exchanges are then a ripe target for existing securities regulation, and they'll also be the biggest validators on the network, so risk for them is risk for the whole network.