According to a recent statement from the U.S. Securities and Exchange Commission (SEC), cryptocurrency mining using proof-of-work does not fall under the federal securities laws. The agency informed mining operators that they are not required to register their transactions with them.
The announcement, made by the SEC’s Division of Corporation Finance, stated that individual and pooled proof-of-work crypto mining activities do not classify as securities transactions based on the Howey Test— a legal standard used to identify whether an investment constitutes a contract. This is because such mining is “not carried out with a reasonable expectation of profits derived from the entrepreneurial or managerial efforts of others.”
This clarification alleviates any remaining concerns that the SEC’s enforcement division might target proof-of-work miners. Previously, while the agency under former Chair Gary Gensler controversially acknowledged that bitcoin is a commodity rather than a security, its lawsuit against Utah-based Green United—an alleged Ponzi scheme connected to a cloud mining operation—raised alarms within the industry about potential crackdowns on legitimate mining activities.
The SEC emphasized that its recent statement is aimed at enhancing understanding of how federal securities laws apply to crypto assets, a goal the industry has sought for many years. With new leadership under Acting Chair Mark Uyeda, who has formed a Crypto Task Force led by crypto-friendly Commissioner Hester Peirce, the agency has quickly started to revise its stance on cryptocurrency, dismissing lawsuits and investigations initiated during Gensler’s tenure and revoking the contentious Staff Accounting Bulletin 121.
This statement follows closely behind a similar announcement made in February, where the SEC indicated that most memecoins are beyond the scope of its jurisdiction.
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With its new leadership, the SEC has shown an increased openness to collaborate with the crypto sector to develop better and clearer regulatory frameworks going forward. On Friday, the agency will convene a roundtable discussion to define what qualifies a cryptocurrency as a security— marking the first of a series of dialogues between the regulator and industry stakeholders.