- The U.S. Securities and Exchange Commission has clarified that certain proof-of-work (PoW) mining activities do not constitute securities transactions
- The new guidance states that protocol-level mining to maintain network security does not require registration
- The update offers regulatory clarity, though officials stress that context and specifics still matter
The U.S. Securities and Exchange Commission (SEC) has confirmed that cryptocurrencies created through the proof-of-work consensus mechanism do not qualify as the offer or sale of securities. The guidance, released yesterday, is designed to help miners and blockchain developers understand whether their activities trigger SEC oversight. However, officials have warned the statement does not apply universally and that specific facts still need to be assessed.
Only Protocol-Level Mining Gets the All-Clear
In a statement released on March 20, the SEC’s Division of Corporation Finance said that it does not consider protocol mining—such as that used in Bitcoin and Dogecoin—as an offer or sale of securities under federal law. The agency defined this activity as one where miners “are validating transactions and maintaining the network’s security and integrity” in exchange for tokens. “These activities… do not involve an investment of money in a common enterprise with a reasonable expectation of profits derived from the efforts of others,” the statement said.
The agency added that since these tokens are not being sold to raise capital or as part of an investment scheme, they fall outside the SEC’s regulatory purview. The clarification only applies to permissionless, public blockchains where miners are rewarded through automated protocol rules and not via business arrangements with third parties. Cryptocurrencies such as Kaspa ($KAS) and Radiant ($RXD) are examples of proof-of-work projects that might still be considered securities due to elements of their creation.
Commissioner Urges Caution
SEC Commissioner Caroline Crenshaw welcomed the distinction but cautioned that “economic realities matter,” noting that the analysis of whether something is a security remains fact-specific. “The Statement does not—and could not—provide a basis for blanket exemptions,” she wrote. Crenshaw emphasized that many mining setups, particularly those involving token pre-sales or third-party funding, may still involve securities offerings.
While the SEC’s latest statement is likely to be welcomed by Bitcoin miners and others involved in protocol-level work, it comes with a clear caveat: each project must still be evaluated on its individual structure and purpose. The update helps clarify that simply running mining software on a blockchain doesn’t, in itself, trigger securities laws—but that doesn’t mean other crypto activities are off the hook.
