Proof-of-Work Cryptocurrency Mining Does Not Fall Under Federal Securities Laws

The U.S. Securities and Exchange Commission (SEC) has officially clarified that proof-of-work cryptocurrency mining does not fall under federal securities laws.

The U.S. Securities and Exchange Commission (SEC) has officially stated that proof-of-work cryptocurrency mining does not fall under federal securities laws.

In a staff statement released on Thursday, the SEC confirmed that mining operators are not required to register their activities with the regulator. This move provides much-needed clarity for the digital asset industry.

🚨NEW: The @SECGov has just put out guidance on how certain proof-of-work mining activities should be viewed under existing securities laws.Full guidance here: https://t.co/VbANz0pQLOpic.co/jCvl6ZZOuh

— The Digital Chamber (@digitalchamber) August 24, 2023

What Did the SEC Say About Proof-of-Work Mining?

According to the SEC’s Division of Corporation Finance, individuals and entities participating in mining activities, specifically proof-of-work mining, do not need to file transactions.

The agency stated that a miner’s role in the process doesn’t create an expectation of profit derived from the efforts of others. Instead, miners contribute their computing power to secure the network and earn rewards based on the network’s software protocol.

Related: Trump’s Crypto Agenda: Bitcoin Mining and SEC Overhaul Plans

The SEC’s statement also covered mining pools, which combine resources to increase processing power and share the earned rewards. The agency clarified that, similar to individual miners, those involved in mining pools do not expect profits based on the entrepreneurial efforts of others.

SEC Clarification Important for the Crypto Industry

The SEC’s clarification is important for the crypto industry, particularly for those involved in mining digital currencies like Bitcoin, Dogecoin, Litecoin, and Dash, all of which operate on proof-of-work blockchains.

Cody Carbone, president of The Digital Chamber, hailed the staff statement as a breakthrough moment for Bitcoin miners and a positive step forward for the industry as a whole. He explained that this clarification provides essential legal certainty, allowing the mining sector to grow and expand within the United States.

The SEC has been shifting to a more supportive stance towards digital assets since President Donald Trump’s administration took over. The SEC has been busy rolling back the stricter crypto regulations that were previously put in place by former Chair Gary Gensler.

Related: Russia Legalizes Crypto Mining, Shakes Up Bitcoin Scene

The SEC has also begun to re-evaluate its stance on other crypto-related matters, such as memecoins. In February, the agency released a statement clarifying that the majority of memecoins do not fall under its regulatory purview.

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