The SEC’s recent exemption for Proof of Work (PoW) mining has generated optimism—could altcoin ETFs be on the horizon?

The most recent announcement by the US Securities and Exchange Commission (SEC) has clarified that crypto mining does not violate securities laws. The report indicates that both Solo Mining and Mining Pool are not carried out with a reasonable expectation of profit, therefore registration with the Agency is not necessary. Additionally, the SEC stated that mining activities related to protocol mining do not entail the offering and selling of securities as outlined in the Securities Act of 1933. As stated in the report analyzed by CNF, the Commission has determined that mining operations are not obligated to register transactions with the SEC. Additionally, the Division clarified that this recent perspective applies to “Mining Covered Crypto Assets on a Proof of Work (PoW) network,” along with the functions of mining pools and the operators within the Protocol Mining framework. Experts suggest that this means mining operations for Proof of Work tokens such as Bitcoin (BTC), Litecoin (LTC), and Bitcoin Cash (BCH) would not be seen as violations of securities laws. Interestingly, this stance represents a notable change from the previously contentious perspective on such activities. In its earlier case against Green United, the Commission asserted that cryptocurrency mining equipment qualifies as securities. The latest announcement now clarifies that mining should be viewed as a purely administrative task. By contributing computational power to the network, miners are simply performing a ministerial function to maintain the network, verify transactions, add new blocks, and earn rewards. This includes the SEC’s clarification regarding both solo mining and mining pools. The SEC pointed out that solo mining is not typically pursued with realistic profit expectations. Rather, the miner provides computational resources primarily to ensure the security of the network. By doing this, he receives incentives as decided by the network.