SEC Rules Proof-of-Work Mining Does Not Violate Securities Law
by Maisie Morrison · BlockonomiTLDR
- The SEC has declared that proof-of-work crypto mining does not violate U.S. securities law
- This ruling specifically benefits Bitcoin and Dogecoin, two major cryptocurrencies that use proof-of-work
- The SEC stated mining operations do not need to register as securities because rewards aren’t derived from third-party managerial efforts
- This marks a shift from the previous administration’s approach, which had targeted proof-of-stake networks like Ethereum
- The Trump administration’s SEC has established a crypto task force led by Hester Peirce and is moving away from “regulation by enforcement”
The U.S. Securities and Exchange Commission (SEC) announced Thursday that proof-of-work cryptocurrency mining does not fall under U.S. securities law. This decision brings clarity to miners of Bitcoin, Dogecoin, and other proof-of-work cryptocurrencies who now know their operations don’t require securities registration.
The guidance specifically addresses mining activities on public, permissionless blockchain networks. The SEC explained that miners are simply “engaging in an administrative or ministerial activity to secure the network” when they add computational resources.
This ruling marks a key distinction in how different consensus mechanisms are treated by regulators. While proof-of-work mining has been cleared, proof-of-stake blockchains like Ethereum and Solana have previously been flagged by regulators.
Under the previous administration, the SEC had suggested proof-of-stake systems could satisfy the Howey test. This test determines if an asset qualifies as a security based on investment of money with profit expectations from others’ efforts.
The new guidance centers on the source of rewards for participants. According to the SEC, proof-of-work mining doesn’t constitute a security because miners’ “expectation to receive rewards is not derived from any third party’s managerial or entrepreneurial efforts.”
Trump’s SEC Shifts Course on Crypto Mining
Bitcoin and Dogecoin stand to benefit most from this ruling. These cryptocurrencies are the two largest proof-of-work coins by market capitalization, both ranking in the top 10 overall.
Proof-of-work mining involves computers competing to solve complex mathematical problems. This process secures the network while processing transactions on the blockchain.
Bitcoin mining has evolved into a major industrial operation. Large facilities with specialized equipment now dominate the mining landscape, though some still attempt to mine independently.
The SEC’s announcement continues a trend of regulatory clarity under the new administration. Since President Donald Trump took office, the SEC has established a crypto task force led by Commissioner Hester Peirce.
Peirce, often called “Crypto Mom” for her supportive stance on digital assets, has been critical of the previous administration’s approach. In February, she wrote that it would take time to correct what she described as a regulatory “mess.”
The SEC under Trump has moved away from what some called “regulation by enforcement.” The regulator has dropped several lawsuits and investigations against crypto companies that had been initiated under former Chair Gary Gensler.
This shift aligns with Trump’s stated goal to make America a “Bitcoin superpower” and the “world’s blockchain and crypto capital.” His administration has created the Council of Advisers on Digital Assets to develop regulations for the industry.
Additional crypto-friendly legislation may be on the horizon. The Blockchain Association has indicated that a cryptocurrency market structure bill could be ready by summer, while a comprehensive stablecoin bill might reach the president’s desk within months.
This regulatory clarity comes as Bitcoin trades near $84,000, having recently broken a four-month downtrend. The market appears poised to benefit from what industry insiders describe as a “pro-crypto policy tailwind” under the current administration.