- The SEC has confirmed that PoW mining does not require securities registration.
- Mining pools, like individual operations, are not subject to securities regulations.
- The SEC’s stance reflects broader changes in its approach to cryptocurrency oversight.
The U.S. Securities and Exchange Commission (SEC) has provided clarity on proof-of-work (PoW) mining activities, stating that these do not involve the offer or sale of securities. The SEC’s statement marks a shift in its approach to the crypto industry, following recent actions and leadership changes.
No Need for Registration with the SEC
The SEC’s division of corporation finance issued a statement on Thursday affirming that PoW mining does not require registration under the Securities Act. The agency clarified that participants in mining activities are not obligated to register transactions or fall within the exemptions from registration related to these activities.
The SEC’s decision was based on the Howey Test, a legal framework derived from a 1946 U.S. Supreme Court case. This test is used to determine whether an asset qualifies as an investment contract, thus making it a security. The SEC concluded that mining operations, including those run by individual miners, do not meet the criteria for being securities. Miners, according to the SEC, contribute their own computational resources, which helps secure the network and earn rewards issued by the network’s protocol.
Mining Pools and Their Classification
The SEC also addressed mining pools, which combine the computational power of multiple miners to share rewards. Like individual mining, mining pools are not considered to have an expectation of profits based on the efforts of others, according to the SEC. This distinction further clarifies the regulatory landscape for crypto miners.
This latest development is part of a broader shift in the SEC’s stance toward the crypto industry. The agency has recently rescinded controversial crypto accounting guidance, dropped enforcement actions against major crypto firms, and released statements about memecoins. Additionally, the SEC has formed a crypto task force to address issues related to securities status.
Cody Carbone, president of The Digital Chamber, called the SEC’s statement a significant development for Bitcoin miners, as it brings much-needed legal clarity. This decision is expected to help foster growth within the U.S. mining industry.
