This is a segment from the Empire newsletter. To read full editions, subscribe.
The SEC has spoken: Certain mining activities — specifically proof-of-work mining, a key element of bitcoin — don’t fall under US securities rules.
“It is the Division’s view that participants in Mining Activities do not need to register transactions with the Commission under the Securities Act or fall within one of the Securities Act’s exemptions from registration in connection with these Mining Activities,” the SEC said in a statement yesterday.
The prevailing sentiment about the news: hooray for clarity!
“This announcement is another indication that the SEC intends to provide regulatory clarity regarding crypto assets,” Pillsbury’s Daniel Budofsky said.
However, Commissioner Caroline Crenshaw (the only Democratic commissioner) was not too pleased by her agency’s statement.
Her critique is that the statement sounds nice, but she’s cautious that some people might read too much into it and assume that they’re in the clear if there is a way for the Howey test to be successfully applied to their operation.
“The statement leaves us exactly where we started: with a facts-and-circumstances application of Howey. For the sake of investors, other market participants, and the markets themselves, I hope that readers do not mistake it for something more than it is,” she noted.
While I get her caution — crypto loves to jump to conclusions before talking to a real lawyer — the SEC’s statement seems to give enough clarity on what actually doesn’t stand up to the Howey test.
