Why, and How, Are Institutions Unlocking Value Through Staking? The Devil Is in the Details.

London, UK, June 24, 2025 – Staking has evolved into a core component of institutional digital asset strategies. By participating in transaction validation and network security on Proof-of-Stake (PoS) blockchains, institutions can unlock new avenues for value creation. Institutional adoption has been accelerated by increased regulatory clarity, such as the European Union's Markets in Crypto-Assets (MiCA), which provides a framework for crypto-asset adoption; according to data on MiCA’s impact, as one example, German banks now hold over $20 billion in staked assets, and staking participation within MiCA-compliant platforms has grown by 35% in 2025. Switzerland, which led the way in regulation with the 2017 approval of the Swiss Financial Market Supervisory Authority (FINMA), now boasts a 23% crypto adoption rate. Staking services are widely available across Swiss institutions, including state-owned public bank PostFinance, which began offering Ethereum staking to its 2.7 million clients in January.

For many institutions, the question is no longer if they should be staking, but how. Exploring staking quickly reveals that the models for participation vary significantly. Understanding the nuances of custody, liquidity, and compliance is essential for developing a robust staking strategy. The devil, as it turns out, is in the details.

From Holding to Active Participation: Why Institutions Are Embracing Staking
PoS was developed as an energy-efficient alternative to the Proof-of-Work (PoW) consensus used by networks like Bitcoin. In PoS, participants “stake,” or lock up, a network’s native tokens to gain the right to validate transactions, create new blocks, and receive network rewards. Today, the majority of leading blockchains use PoS, with over $583B USD staked globally.

Staking offers more than just the potential for rewards, which can range from 3-25% per network. It represents a pathway to move beyond just holding or trading digital assets into deeper engagement with the technology. Validators are critical infrastructure operators supporting a global digital economy. The direct, consistent role that validators play in PoS networks leads staking to be referred to by many as “the internet bond,” a figurative comparison to the risk-free rate for the blockchain economy.

But staking is accompanied by its unique risks, including slashing (a validator penalty) and lock-up periods. Regulatory positioning, a key input to choosing a staking model, is also rapidly evolving; while the EU’s MiCA regulation aims to provide a harmonized baseline, key financial centers including the United Kingdom, Switzerland, and the United Arab Emirates are concurrently developing and implementing their specific rules and guidance.
As a result, the prospect of receiving rewards must be conditioned by the institutional imperatives of risk management and regulatory compliance. To do so requires a detail-oriented approach to due diligence, ensuring that a staking provider can meet your specific mandates for custody, liquidity, and security.

Comparing Key Staking Models
Institutions comparing staking solutions are faced with several participation models. Two of the primary distinctions lie in who controls the staked assets and how liquidity is managed.

Custodial vs. non-custodial
In staking, custody refers to who holds and controls the private keys associated with the staked assets. This detail determines whether an institution retains direct ownership of its assets or entrusts them to a third-party provider.

• Custodial staking: In this model, the assets are transferred to a staking provider’s wallet. Staking is handled on the token holder’s behalf for an agreed-upon portion of the rewards, which the provider is trusted to distribute. The primary appeal is simplicity and convenience. The main drawback is counterparty risk.

• Non-custodial staking: This model allows an institution to stake while retaining full control of its private keys. The staking provider handles validator operations without ever taking custody of the assets. The primary benefits are enhanced security through reduced counterparty risk, direct receipt of network rewards, and greater autonomy. This approach allows an institution to select its custody solution, whether that is a specialized qualified custodian, self-custody, or even a smart contract. The main trade-off is a potential increase in operational complexity, as the staker must coordinate their own custody.

As a non-custodial staking provider, Figment operates validators without ever taking possession of the staked assets, institutions retain complete control of their private keys and custody arrangements.

From a regulatory and security standpoint, the distinction is critical. Some interpretations suggest that non-custodial staking is more akin to providing technical infrastructure than offering a financial product, as control over the assets never leaves the staker. In contrast, custodial solutions are more likely to be classified as crypto-asset-service-providers (CASPs) under frameworks like MiCA. The custody choice is therefore deeply intertwined with an institution's risk framework and regulatory jurisdiction.

In 2023, Switzerland's FINMA issued detailed guidance on how custodians must manage risks associated with staking to ensure client assets are protected, particularly in bankruptcy scenarios. Staking products that pool client tokens under one wallet address are required to obtain a license under the Swiss Banking Act, however, if each client's staked tokens are held in individual wallet addresses, no license is required. Guidance was extended for institutions who outsource their staking operations, requiring they retain custody of their clients’ staking withdrawal addresses — effectively requiring that they work with non-custodial staking providers.

This strong regulatory clarity has led to the growth of Swiss banks and institutions offering staking services, including the state-owned public bank PostFinance, Maerki Baumann & Co. AG, Swissquote, and others.

Traditional staking vs. liquid staking
The methods for participating in staking continue to evolve, with liquid staking emerging as a popular technology to solve staking’s capital inefficiency.

• Protocol staking: Often called "native" or “traditional” staking, protocol staking is the foundational process of running a validator. While staking, the assets are illiquid. The benefits of traditional staking include its simplicity and the direct relationship to the validator, without intermediary technologies. Its primary drawback is its illiquidity, which can pose a challenge during volatile markets.

• Liquid staking: When liquid staking participants stake, they receive a receipt token—a liquid staking token (LST)—representing ownership of their staked assets and network rewards. The most significant benefit is liquidity; LSTs can be traded, transferred, or used in decentralized finance (DeFi) applications.This allows participants to earn staking rewards while deploying their capital elsewhere. The downside is the potential for additional risks that LSTs can introduce, including smart contract vulnerabilities and counterparty risks.

• Restaking: Restaking allows participants to use their already-staked assets or staking positions (including LSTs) to secure additional protocols and services, often referred to as “Actively Validated Services” (AVSs). By extending the utility of staked capital, restaking can generate additional rewards on top of traditional or liquid staking. The benefit is capital efficiency and deeper network involvement. However, restaking introduces new layers of complexity and risk, such as slashing exposure across multiple services, smart contract vulnerabilities, and coordination challenges between protocols.

While the regulatory treatment of LSTs can be less clear than that of protocol staking in some regions, liquid staking policies are growing in discussions as LSTs become an increasingly-preferred way to stake. The European Securities and Markets Authority (ESMA) and the European Banking Authority (EBA), which aim to provide greater clarity to MiCA through technical standards, have issued reports that discuss liquid staking and its consumer protection considerations. FINMA distinguishes between "direct staking" (where the custodian operates the validator node itself or retains control over withdrawal keys) and "staking chain" models (where staking is delegated to further third parties), imposing specific due diligence requirements for the latter, which in some cases may include LSTs.

Institutions must carefully evaluate whether the benefits of enhanced liquidity outweigh the additional risks that might be introduced by LSTs and Restaking. Diligence should focus on the security, transparency, and compliance models of the liquid staking protocol. Further, LSTs may introduce additional reporting or balance sheet considerations depending on their use.

Staking Strategically, Guided by the Details
The "devil in the details" for all staking models extends to the nuances of reward calculations, fee structures, and the terms of one’s staking agreement. Advertised rewards can be misleading if they don’t transparently account for factors like underlying token inflation, commission rates, and security controls. Crucially, slashing penalties can significantly erode rewards, and the manner in which providers mitigate risks while maximizing performance is a critical consideration.

Staking has firmly established its role as a core pillar of a sophisticated digital asset strategy, offering a means to generate rewards, contribute to network security, and deepen engagement with the future of finance.

By focusing on the critical details of custody, liquidity, and operational excellence, institutions can navigate the complexities of the landscape. Working closely with trusted technical experts and staking providers to find the model best suited to their needs will illuminate a clear path to growing their digital asset strategy through staking.

About the Author
Article authored by Eva Lawrence, Head of EMEA at Figment