The SEC has issued guidance on viewing Proof of Work mining activity under existing securities laws

BlockBeats News, March 21, the U.S. SEC issued a "Statement on Certain Proof-of-Work Mining Activities," as part of an effort to provide greater clarity on the application of federal securities laws in the cryptocurrency space, the Division of Corporate Finance has shared its views on certain activities conducted on proof-of-work (PoW) networks (referred to as "mining").

The statement specifically addresses mining of cryptographic assets closely associated with the programmatic functionality of public, permissionless networks, where these cryptographic assets are used to participate in or obtain rewards from the network's consensus mechanism, or to maintain and secure the technical operation of the network. These cryptographic assets are referred to in this statement as "Covered Crypto Assets," and their mining activities on proof-of-work networks are referred to as "Protocol Mining."

Sections 2(a)(1) of the Securities Act and 3(a)(10) of the Exchange Act define the term "security" by listing various financial instruments (including "stocks," "notes," and "bonds"). Since Covered Crypto Assets do not fall within any of the financial instruments explicitly listed in the definition of a "security," our analysis of certain transactions involving Covered Crypto Assets in the context of Protocol Mining is based on the "investment contract" test established in the case of SEC v. W.J. Howey Company ("Howey Test"). The Howey Test is used to analyze arrangements or instruments that are not specifically enumerated in the statutory terms, based on their "economic reality."