The U.S. Securities and Exchange Commission said Thursday that proof-of-work mining—which underpins Bitcoin and some other blockchain networks—does not violate U.S. securities law.
In its latest guidance to clarify rules for the fast-moving industry, the regulator said that mining operations do not need to register their actions as they "do not involve the offer and sale of securities."
Securing crypto network has always been controversial. The SEC, under the former administration, declared that proof-of-stake blockchains like Ethereum You can also find out more about the following: Solana—where crypto holders passively earn returns by pledging coins or tokens to a network—could satisfy the Howey Test.
Under U.S. law, an asset passes the Howey test and meets the definition of a security if it is an investment of money in a common enterprise from which there is an expectation of profit based on that enterprise's efforts.
Some of the most popular cryptocurrencies include Bitcoin, DogecoinThen, Litecoin “All Run On” proof-of-work blockchains. Computers around the globe race each other to solve math problems to be able to process the blocks and transactions on the blockchain.
Proof-of-work requires miners, which are typically large, industrial operations—especially with Bitcoin, the biggest and oldest cryptocurrency. Some people mine Bitcoin alone. However, Dogecoin or other less valuable cryptocurrencies are easier to mine.
SEC wants to know if proof-ofwork miners will be rewarded by digital coins.
According to the regulator, as a miner's "expectation to receive rewards is not derived from any third party's managerial or entrepreneurial efforts upon which the network's success depends," it does not come under the SEC's jurisdiction.
"By adding its computational resources to the network, the miner merely is engaging in an administrative or ministerial activity to secure the network, validate transactions and add new blocks, and receive rewards," the SEC said.
Although the regulator didn’t mention specific networks or coins, Bitcoin and Dogecoin, which are both in the top 10 by market capital, are two of the largest proof-of work coins. Ethereum initially ran a Proof-of Work network but changed to a Proof-of Stake model by 2022.
Gary Gensler was the former chair of SEC Hit the road with your friends and family! A number of leading American crypto companies were fined for offering services to stake securities, with the claim that these firms made money by allowing their customers stake unregistered assets.
When you think about it, The Election of the President The SEC, under the new leadership of Donald Trump and his crypto-friendly views, has become a proponent. The following are some of the ways to get in touch with each other The agency is trying to simplify the rules and eliminate a lot of litigation and investigations.
Edited By Andrew Hayward
