The U.S. Securities and Exchange Commission (SEC) recently issued an important announcement clarifying its stance on cryptocurrency mining activities using the Proof-of-Work (PoW) mechanism. Accordingly, the SEC asserts that PoW is not considered a form of securities offering, providing legal clarity for the crypto mining industry in the U.S.



SEC: Coin mining is not within the scope of securities


In a recent announcement, the SEC's Corporate Finance Division stated that participants in cryptocurrency mining activities do not need to register with #SEC under U.S. securities law.



"The SEC's stance is that participants in cryptocurrency mining activities do not need to register their operations with the commission under the Securities Act or be counted under registration exemptions under the Securities Act."



The Proof-of-Work mechanism is a popular consensus method in blockchains like Bitcoin, Litecoin, Dogecoin, etc. Miners use computational power to solve complex problems to verify transactions and create new blocks. In return, they receive rewards in the form of new coins generated from that block.


In contrast, the Proof-of-Stake (PoS) mechanism – used in many blockchains like Ethereum, Solana – requires participants to lock assets to validate transactions. This raises concerns that PoS could be viewed as a form of investment security under U.S. law.



Why is PoW not a security?


The SEC uses the Howey Test to determine whether an asset is a security based on 4 criteria:



  1. An investment of money


  2. That investment is made in a common enterprise


  3. The investor has an expectation of profits


  4. Profits are generated from the efforts of others



According to the SEC, coin mining does not meet the fourth criterion because:


  • Miners use their own computing resources to mine coins, rather than relying on third parties.


  • The rewards they receive come from the blockchain protocol's algorithm, not created by a centralized managing organization.



Therefore, the SEC concludes:



"The mining activities of miners are not performed with the expectation of profits derived from the efforts of others. Instead, miners use their own computational power to enhance the security of the network and are rewarded according to the protocol's programming."



Even mining pools – groups of miners cooperating to increase their success rate – are not viewed as securities, as each member still uses their own computational power.



Impact on the Bitcoin mining market


The SEC's announcement reinforces the legality of cryptocurrency mining activities, especially Bitcoin (BTC), which is using #POW . This incentivizes mining companies to continue expanding operations in the U.S. without legal risks.


According to The Chain Bulletin, the United States currently leads the Bitcoin mining hashrate, with a 37.84% market share. The following countries are:



  • China: 21.11%


  • Kazakhstan: 13.22%


  • Canada: 6.48%


  • Russia: 4.66%


  • Germany: 3.06%



With the U.S. government taking a more open stance towards crypto, it is evident that the position of the Bitcoin mining industry in the U.S. will continue to be strong in the future.



President Trump and changes in crypto policy


Since President Donald Trump took office, he has implemented a series of reforms related to the financial sector, including crypto regulation policy.


Under the leadership of acting SEC Chairman Mark Uyeda, the commission has established a dedicated working group on crypto and implemented several notable changes:



  • Dropping lawsuits against major cryptocurrency companies such as Coinbase, OpenSea, Robinhood, Uniswap, Kraken, Ripple...


  • Easing regulations, helping crypto companies operate more smoothly.


  • Considering allowing staking, opening new opportunities for blockchains using the PoS mechanism.


  • Accepting multiple ETF altcoin registration filings, showing a more open attitude towards the digital asset market.



Additionally, Paul Atkins, a crypto-friendly figure, is set to be appointed as the new SEC Chairman, promising to bring many supportive policies for the cryptocurrency market in the future.



Has the SEC changed its stance on PoS?


While showing openness to Proof-of-Work, the SEC has not yet reached a clear conclusion on Proof-of-Stake.



  • Previously, former SEC Chairman Gary Gensler suggested that staking could be viewed as securities due to the potential for generating passive income from the underlying assets.


  • Currently, the SEC is still considering whether to apply securities regulations to PoS blockchains.


However, with the SEC's new direction under Mark Uyeda and Paul Atkins, the agency may take a more flexible approach to staking.



Conclusion


The SEC's official recognition that Proof-of-Work is not a security is a significant step forward for the cryptocurrency market, particularly for the Bitcoin mining industry.


  • Mining companies can continue to operate in the U.S. without fear of violating the law.

  • The U.S. position in Bitcoin mining will continue to strengthen.


  • The Trump administration and the SEC are gradually adopting more supportive crypto policies.


However, the legal status of Proof-of-Stake remains unclear, and the market is still awaiting further decisions from the SEC.