The SEC confirms that the POW CRYPTO Mining is exempted from the Securities Law.
Us Securities and Exchange Commission (SEC) clarified its position on encryption mining according to the POW (Proof-of-Work) protocol, which states that mining activities do not include and sell securities. This applies to assets such as BTC (Bitcoin) and Litecoin (LTC).
March 20th nameThe SEC’s Corporation Finance department said that participants in the POW mining are not eligible to register or register a transaction with the Committee or registration under the 1933 Securities Law.
Understanding mining
The SEC statement focuses on “protocol mining”, which includes activities related to network security in the POW -based blockchain.
This blockchain is operated without a central intermediary and depends on miners who contribute to computational resources to check the transactions and protect the network. In return, the miners are rewarded in the form of newly embedded encryption.
The SEC distinguishes mining from the activities that can configure securities to provide securities under federal law. The regulatory authorities see mining by solving complex encryption puzzles to add new blocks to the blockchain, a process that does not have to own the basic encryption assets of the network.
According to the Howey test that determines whether assets fall under securities regulations, miners’ calculation efforts are regarded as administrative or ministerial activities rather than investment contracts.
Administrative role
This statement also serves as a mining pool that enhances the possibility of successfully verifying new blocks by combining computational resources by individual miners.
The SEC claims that miners participating in the pool are not involved in securities transactions. This is because income comes from the calculation donation rather than a third party’s management efforts.
Swimming pool operators who adjust mining activities and distribute compensation participate in administrative functions rather than entrepreneurship or management efforts to classify mining pools as securities proposals.
The explanation of the SEC provides regulation of the POW miners and mine pool participants, and strengthens their activities that they do not belong to the scope of the Federal Securities Law.
By confirming that mining activities are not departed from the definition of securities transactions, the specifications allow miners to continue operations without any additional compliance with securities regulations.
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