Is there any chance that stake pool operators could be considered to be offering financial services?

If so, does anyone know whether there is a need to register with any entity or follow any specific rules (examples in different countries would be useful)?

I'm trying to decide whether to run a Cardano stake pool as an individual or as one activity within a technology company that offers IT services.

4 Answers 4


This is a great question. I think it could be interpreted either way but this is how we have interpreted it.

Our interpretation is no, as a SPO we are not providing a financial service any more than miners would be considered providing a financial service to the Bitcoin blockchain. We operate nodes that make blocks; our service is to the decentralized Cardano chain (technically you could say we are providing a service to anyone that sends a transaction that is included in one of our blocks, but there would be no way to know who that is). Delegators essentially "vote" on which stake pool they trust to make blocks. If they vote on a good pool, the Cardano protocol pays them rewards. They are not paid by the stake pool. The key difference here from a POW mining pool is the pool itself doesn't collect all the rewards first and then distribute them, i.e., we aren't accruing profits for delegators and distributing them. The Cardano network handles all of that.

I'd love to get anyone's thoughts on this. Thanks!

  • Playing the devil's advocate, you somehow collect the rewards first as you are creating the blocks and thus collecting the fees for your delegators. But I'm no lawyer.
    – Distic
    Commented Jun 3, 2021 at 9:31
  • Actually no, the rewards are not paid at time of block production. It's two epochs later after they have been calculated. At that time the protocol pays them out to everyone directly and not to us.
    – nalyd88
    Commented Oct 27, 2021 at 2:05

Looking into this for a friend. I think technically the pool operator is not running a financial service. The naming of the staking seems also wrong in ADA this way. This is just signaling. The only real stake is what the pool operator puts up as a collateral. So the pool operator is not taking deposits, custody, is not acting as a fiduciary or controller. I am still unsere as to where the rewards come from. I looked at the blocks in a block explorer (first on google) and did not find the coinbase transaction. I am a very long term Bitcoin guy however (BSV) and the block and fee rewards may work differently in ADA. Are they distributed "later"? If yes that could be interesting point to consider separately.

Nonetheless in many jurisdictions rulings are often not by the only exactly defined stuff. Often it matters if a "quasi" situation is created. In my jurisdiction the highest judges actually read protocols of parliamentary sessions of when the law was defined in order to judge if a new case will "quasi" fit this old intentions or not. In that view you could even go as far as to categorize ADA as a collective investment scheme. That owners of ADA can earn tokens by not actually doing anything (again they are not staking, right, they are not risking coins) like e.g. building blocks. In every crypto there are different levels of degrees of this. If you e.g. care mostly about laser eyes till 100k and zero about utility, you may much easier be seen as this compared to a project that actually tries to build utility and scale. The lines are never as black and white. But on the surface it truly looks like the pool operator does not touch money or make any contractual promises about money (directly) to the "staker". So AML regulations may not apply here. They mostly seem to apply at the initial purchases of ADA for participants. However there is also liability to consider. Could a big "staker" try and hold the pool liable for a downtime?


I think there would certainly be tax benefits to running it as a business. In the U.S., staking income is taxed as regular income. It looks like this:


I’m also looking at running a stake pool as a business in order to reduce the tax bite, which would look like this:


I’ll try to report back what I learn after talking to my accountant this week.


I found this topic very interesting especially as I consider the proper business operating license for a stake pool.

However, in looking at how the protocol actually works, it seems pretty clear that the stake pool only has one customer, the protocol itself, and has no financial relationships with the delegators.

Thus the stake pool can’t be considered a money processing business, nor can it be responsible for KYC on delegators.

I wrote a detailed article about the topic on Medium.


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