SEC Says Proof-of-Work Cryptocurrency Mining Doesn't Violate Securities Laws
In a statement released Thursday, the SEC staff noted that both individual mining and mining pools fail to meet the first step of the Howey Test.
Cheyenne Ligon | Edited by Nikhilesh De , March 20, 2025 20:36 UTC
What is important to know:
- On Thursday, the SEC issued a statement indicating that cryptocurrency mining using the Proof-of-Work method (either individually or in groups) does not fall under its jurisdiction.
- The announcement comes a month after a similar announcement from the SEC's Division of Corporate Finance, which said most memecoins are not securities.
In a statement released Thursday, the SEC said cryptocurrency mining using proof-of-work does not trigger federal securities laws, emphasizing that mining operators are not required to register their transactions with the regulator.
The SEC said in a statement that both individual and group mining of proof-of-work cryptocurrencies do not meet the criteria for a securities transaction under the Howey test — the legal basis used to determine whether a transaction is an investment contract — because they “do not occur with a reasonable expectation of profit from the entrepreneurial or managerial efforts of other participants.”
The announcement allays lingering concerns that the SEC could target proof-of-work cryptocurrency miners. While the agency under previous Chairman Gary Gensler has been reluctant to acknowledge that bitcoin is a commodity, a lawsuit against Utah-based Green United, accused of defrauding a cloud mining scheme, has raised concerns among some in the industry that the SEC could eventually crack down on legitimate cryptocurrency miners.
The SEC said the announcement was “part of an effort to provide greater clarity on how the federal securities laws apply to crypto assets,” something the industry has sought for years. Under the new leadership of Acting Chairman Mark Uyeda, who created a cryptocurrency task force led by crypto-friendly Commissioner Hester Peirce, the agency has quickly changed its approach to cryptocurrencies, dropping lawsuits and investigations started under Gensler and repealing the controversial Staff Accounting Bulletin 121.
The staff's statement on Thursday came shortly after the SEC issued a similar statement in February, which found that most memocoins were outside the regulator's jurisdiction.
Read more: As Congress debates its groundbreaking bill, regulators are already getting to work
Under new leadership, the SEC has shown a much greater willingness to work with the crypto industry to develop clearer, more effective regulations going forward. On Friday, the agency will host a roundtable discussion on what makes a cryptocurrency a security, the first in a series of roundtables between the regulator and industry participants.
