The US Securities and Exchange Commission (SEC) has officially stated that Proof-of-Work (PoW) cryptocurrency mining does not fall under existing securities regulations.
This is a major win for miners and the broader crypto industry, as it removes the uncertainty about whether mining operations could face legal action.
The SEC’s announcement, made by its Division of Corporation Finance on 20 March, confirms that cryptocurrencies like Bitcoin ($BTC), Litecoin ($LTC), and Bitcoin Cash ($BCH), which rely on PoW mining, are not considered securities under US law.
This means miners and mining pool participants do not need to register their activities with the SEC.
While this decision brings clarity, the SEC has also stated that some mining-related activities, such as how mining pools distribute rewards, could still be examined on a case-by-case basis.
Not considered an investment contract
The SEC explained that PoW mining does not meet the legal definition of an investment contract under the Howey Test.
This test is used to determine whether an asset should be classified as a security by checking if people expect profits based on the work of others.
In PoW mining, individuals use their own computing power to validate transactions and secure the blockchain.
Miners are rewarded for their work, but they are not relying on a third party to generate profits. Because of this, the SEC ruled that mining activities do not qualify as securities.
The agency also reaffirmed that Bitcoin and other PoW cryptocurrencies are considered commodities rather than securities.
The Commodity Futures Trading Commission (CFTC) already treats Bitcoin as a commodity, and now the same classification applies to Litecoin and Dogecoin ($DOGE).
This is an important clarification because commodities are regulated differently from securities and face fewer restrictions.
Although this ruling provides a legal framework for mining, the SEC has not granted a blanket exemption for all mining activities.
It noted that specific mining setups, such as how mining pools share earnings with members, might still require further review.
Market reaction
Despite the importance of the SEC’s announcement, the crypto market did not react strongly.
One reason for this is that much of the industry’s attention was focused on a speech by former President Donald Trump at the Digital Asset Summit, which took place on the same day.
Trump’s remarks suggested that under his leadership, the US could take a more supportive stance on digital assets.
Some experts see the SEC’s statement as a sign that the agency is shifting its approach to crypto regulation.
In recent years, the SEC has been aggressive in taking legal action against crypto projects. However, this latest move suggests a focus on clearer guidelines instead of just enforcement.
This development follows the SEC’s decision to drop its long-running lawsuit against Ripple, which had been centred on whether $XRP should be classified as a security.
Additionally, the SEC recently ruled that certain memecoins do not qualify as securities, further indicating that it is softening its stance on crypto regulation.
However, not everyone within the SEC agrees with this direction. Commissioner Caroline Crenshaw has raised concerns about the new ruling, arguing that it leaves loopholes and does not provide enough protection for investors.
She warned that while PoW assets are not considered securities in general, some mining arrangements could still be subject to SEC oversight.
Impact on crypto ETFs
The SEC’s decision to exclude PoW mining from securities laws could have major consequences, especially when it comes to cryptocurrency exchange-traded funds (ETFs).
Many analysts believe this clarification could open the door for multiple altcoin ETFs to be approved by mid-2025.
By separating PoW cryptocurrencies from securities laws, the SEC may have created a clearer path for ETFs based on assets like Litecoin, Monero ($XMR), and Kaspa ($KAS).
In the past, the SEC has been cautious about approving altcoin ETFs due to regulatory uncertainties. Now that those concerns are being addressed, ETF approvals may be more likely.
The upcoming confirmation of Paul Atkins as the new SEC Chair could further accelerate this process. Atkins is known for being supportive of the crypto industry, and his leadership could lead to a more favorable regulatory environment.
Two other SEC commissioners, Mark Uyeda and Hester Peirce, have also been pushing for clearer crypto regulations, meaning there could be more progress in the near future.
Commissioner Crenshaw, however, remains skeptical about this shift. She has argued that the new guidelines do not carry enough legal weight and might give investors a false sense of security.
Despite her objections, her influence appears to be diminishing as the SEC moves toward a more relaxed stance on crypto regulations.
A new era for crypto regulation
The SEC’s latest decision marks an important step in defining the regulatory landscape for PoW cryptocurrencies.
By confirming that mining activities are not securities transactions, the agency has provided much-needed legal clarity for the industry.
This could encourage more miners to operate within the United States, reducing uncertainty and attracting further investment into the sector.
At the same time, the ruling raises questions about how the SEC will handle future crypto regulations.
While PoW assets have received a clear classification, the regulatory status of other types of cryptocurrencies, such as those using Proof-of-Stake (PoS) systems, remains uncertain.
Some PoS-based projects have already faced legal challenges, and it is unclear if they will receive similar treatment in the future.
For now, the crypto industry sees the SEC’s statement as a positive development. Clearer regulations could lead to greater institutional adoption and open the door for new financial products, such as ETFs, that make it easier for investors to gain exposure to digital assets.
Despite some remaining uncertainties, the SEC’s decision signals a shift toward a more structured and predictable regulatory environment.
While there may still be challenges ahead, this move is a step toward integrating cryptocurrencies more smoothly into the broader financial system.
