SEC Declares Proof-of-Work Cryptocurrency Mining Exempt from Federal Securities Laws
The U.S. Securities and Exchange Commission (SEC) has released a press release declaring that proof-of-work cryptocurrency mining doesn’t trigger federal securities laws. According to the statement, each solo proof-of-work crypto mining and pooled proof-of-work crypto mining don’t meet the definition of a securities transaction under the Howey Test, a legal framework used to find out whether a transaction represents an investment contract.
No Expectation of Profits from Others
The SEC’s statement explains that proof-of-work mining isn’t undertaken with an inexpensive expectation of profits to be derived from the entrepreneurial or managerial efforts of others. This implies that miners will not be counting on the efforts of others to generate profits, but fairly are using their very own equipment and resources to validate transactions and earn rewards.
Clarity on Crypto Regulation
The SEC’s statement is a component of an effort to offer greater clarity on the appliance of federal securities laws to crypto assets. The agency has been working to ascertain clear guidelines for the industry, and this statement is a big development in that effort.
Industry Welcome
The crypto industry has been pushing for greater clarity on regulations, and this statement is a welcome development. The SEC’s reversal on its approach to crypto is a big shift under the brand new leadership of Acting Chair Mark Uyeda, who has established a Crypto Task Force to work with the industry to craft higher regulations.
Roundtable Discussion
The SEC will host a roundtable discussion on what makes a cryptocurrency a security, the primary in a series of discussions between the regulator and industry participants. This meeting is a chance for the SEC to have interaction with the industry and gather feedback on its approach to regulating crypto assets.
Conclusion
The SEC’s statement provides much-needed clarity on the appliance of federal securities laws to proof-of-work cryptocurrency mining. This development is a big step forward for the industry, which has been in search of greater clarity on regulations for a while. As the SEC continues to work with the industry, it is probably going that we are going to see further developments within the regulation of crypto assets.
