SEC Clarifies Stance on Proof-of-Work Mining

The U.S. Securities and Exchange Commission (SEC) has reassured miners concerned about regulatory oversight by clarifying that proof-of-work (PoW) cryptocurrency mining does not violate federal securities laws.

The SEC’s Division of Corporate Finance stated that mining operators are not required to register their transactions with the regulator.

The SEC’s finding indicates that both solo and pooled PoW mining do not meet the criteria for a securities transaction under the Howey Test. This legal framework evaluates whether a transaction constitutes an investment contract based on the expectation of profit from the efforts of others. The SEC concluded that PoW mining lacks this component and is therefore exempt from securities regulation.

The largest cryptocurrencies utilizing the Proof of Work mechanism include:

• Bitcoin (BTC)
• Dogecoin (DOGE)
• Litecoin (LTC)
• Bitcoin Cash (BCH)
• Monero (XMR)
• Ethereum Classic (ETC)
• Kaspa (KAS)
• Bitcoin SV (BSV)
• Zcash (ZEC)
• Beldex (BDX)
• Conflux (CFX)
• eCash (XEC)
• Verus (VRSC)
• Dash (DASH)

This announcement eases concerns that the SEC’s enforcement division could target PoW crypto miners. Under former Chairman Gary Gensler, the agency has regarded Bitcoin as a commodity rather than a security but has launched enforcement actions related to fraudulent mining schemes, like the case involving Utah-based Green United. This has sparked fears that legitimate PoW mining operations might face regulatory scrutiny.

This is not investment advice.