The U.S. Securities and Exchange Commission (SEC) has released new guidance on the legal status of Proof-of-Work mining, confirming that such operations do not constitute securities transactions, providing much-needed regulatory clarity.
New SEC Guidance
In its new statement, the SEC explains that Proof-of-Work networks operate as public, permissionless systems where miners validate transactions through computational effort. According to the SEC, Proof-of-Work mining activities do not fall under the definition of securities transactions as they do not depend on the managerial efforts of others—a key factor under the Howey Test. The term 'Covered Crypto Assets' is introduced for tokens earned through Proof-of-Work mining.
Role of Mining Pools
The SEC also addresses the role of mining pools, which aggregate computing power to improve the likelihood of earning block rewards. While pool operators coordinate resources and manage earnings distribution, their role is considered administrative rather than managerial. Thus, participation in mining pools does not alter the fundamental nature of protocol mining or create an investment contract structure.
Impact on the Industry
This new statement from the SEC removes uncertainties for miners operating in the U.S., confirming that they do not need to register their activities or comply with securities-related reporting requirements. This could boost confidence among mining firms, especially given the regulatory scrutiny due to energy consumption and environmental impacts.
These SEC guidelines provide greater legal clarity for miners in the U.S. and may benefit the industry by reducing regulatory concerns.
