TLDR
- SEC clarifies that proof-of-work (PoW) mining does not constitute securities dealing under certain conditions
- Bitcoin, Dogecoin, Litecoin and other PoW blockchains are not subject to securities regulations according to the new guidance
- Mining activities including solo mining and mining pools are considered administrative rather than investment activities
- The SEC statement marks a shift from previous administration’s crypto regulatory approach under Gary Gensler
- This development aligns with President Trump’s pro-crypto policy stance and broader regulatory clarity initiatives
In a move that clarifies the regulatory landscape for cryptocurrency miners, the U.S. Securities and Exchange Commission (SEC) announced on March 20 that proof-of-work mining does not fall under securities law.
The announcement specifically addresses mining activities on public, permissionless blockchain networks such as Bitcoin, Dogecoin, and Litecoin.
The SEC’s Division of Corporation Finance released a detailed statement explaining that mining activities on proof-of-work networks do not involve “the offer and sale of securities” as defined in the Securities Act of 1933. This means miners will not need to register their operations with the SEC or seek exemptions from securities regulations.
The statement applies to both solo miners and those participating in mining pools. According to the regulator, miners are simply “engaging in an administrative or ministerial activity to secure the network, validate transactions and add new blocks, and receive rewards.”
This regulatory clarity comes as a welcome development for the cryptocurrency industry. The SEC explained that proof-of-work mining differs from other blockchain consensus mechanisms because miners do not earn rewards based on “any third party’s managerial or entrepreneurial efforts.”
A Change of Approach
The statement marks a contrast from the previous administration’s approach to cryptocurrency regulation. Under former Chair Gary Gensler, the SEC had taken a more stringent stance, particularly regarding proof-of-stake networks like Ethereum and Solana.
Proof-of-work is the consensus mechanism used by Bitcoin and several other major cryptocurrencies. It requires computers worldwide to compete in solving complex mathematical problems to process transactions and secure the network.
Bitcoin miners, which are often large industrial operations, earn newly created Bitcoin as rewards for their work. Similar mining activities occur on other proof-of-work blockchains like Dogecoin and Litecoin, though these can sometimes be mined by individuals with less powerful equipment.
The SEC did not mention any specific cryptocurrencies by name in its statement. However, the guidance clearly applies to major proof-of-work networks such as Bitcoin, which has long been considered a commodity rather than a security by U.S. regulators.
Mining pools, where multiple miners combine their computing resources to increase their chances of earning rewards, also received regulatory clarity. The SEC stated that pool operators’ activities are “primarily administrative or ministerial in nature” and don’t change the fundamental character of mining.
The statement explained that miners don’t join pools based on “the ability to earn profits passively from the activities of the pool operator.” Rather, they still rely on their own computational resources combined with others to earn mining rewards.
Trump’s Pro Crypto Policies
This announcement aligns with President Donald Trump’s stated goal to make America the world’s blockchain and cryptocurrency capital. Trump has established the Council of Advisers on Digital Assets to advance what he calls “common-sense regulations” for the industry.
The cryptocurrency regulatory landscape appears to be evolving rapidly under the new administration. Bo Hines, executive director of the Council of Advisers on Digital Assets, recently revealed that a comprehensive stablecoin bill could reach the president’s desk within months.
Industry advocacy group Blockchain Association has also indicated that a cryptocurrency market structure bill is expected by summer. Kristin Smith, the association’s CEO, stated,
“I think we’re close to being able to get those done for August. They’re doing a lot of work on that behind the scenes right now.”
The SEC’s move away from what critics called “regulation by enforcement” marks a turning point for the industry. Under its new leadership, the commission has already scrapped a number of lawsuits and investigations against cryptocurrency companies.
The division’s view specifically states that “Mining Activities” in connection with proof-of-work do not involve the offer and sale of securities within the meaning of relevant securities laws. The SEC applied the “Howey test,” which is used to determine whether certain transactions qualify as investment contracts.
According to the SEC’s analysis, proof-of-work mining fails to meet key criteria of the Howey test. Miners are not investing with “a reasonable expectation of profits to be derived from the entrepreneurial or managerial efforts of others.”
