- The SEC clarified that PoW mining on permissionless networks isn’t deemed an “offer and sale of securities” under the 1933 Act if specific conditions are met.
- The regulator stated that mining is an administrative activity — securing the network, validating transactions and earning rewards based on computational contribution.
- The ruling applies to individual miners, mining pools and operators, aligning with the SEC’s broader move to drop lawsuits against major crypto firms.
In a much-needed breather for miners, the US Securities and Exchange Commission (SEC) announced on Thursday that proof-of-work (PoW) mining does not violate securities laws, removing the need for such activities to be registered under the Securities Act of 1933.
In a statement dated March 20, the SEC’s Division of Corporation Finance highlighted that PoW mining, referred to as “Protocol Mining”, covers transaction validation and network security for blockchains that rely on computational power rather than a central intermediary.
Miners receive newly minted crypto rewards, termed “Covered Crypto Assets”, for verifying transactions and securing the network.
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Mining Just an Administrative Activity
The SEC’s latest statement clarifies that mining is just an “administrative practice”:
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.
US SECThe regulator also clarified that participants in mining pools —where miners pool their computational resources to increase their chances of discovering new blocks— are also not considered to be engaging in securities transactions.
Similarly, pool operators, who coordinate efforts and distribute earnings, also perform “administrative” activities, noting that the rewards still depend on each miner’s computational contribution, not on any party’s managerial expertise or entrepreneurial efforts.
The SEC did not cite any specific coins, but it’s logical to assume that this applies to all cryptocurrencies that use the PoW algorithm.
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The SEC’s announcement comes as the regulator decided to end its “wasteful, politically motivated campaign”, as it called it, by dropping several lawsuits against some of the most important crypto companies/ecosystems, including Kraken, Ripple Labs, and Uniswap.
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