SEC releases guidance on how to view proof of work mining activities under existing securities laws

According to BlockBeats, on March 21st, the US SEC issued a statement regarding certain proof of work mining activities. As part of efforts to provide greater clarity for the application of federal securities laws in the field of cryptocurrency, the company's finance department has expressed its views on certain activities conducted on the Proof of Work (PoW) network (referred to as "mining"). The statement specifically relates to the mining of encrypted assets closely related to the programmatic functions of public, permissionless networks, which are used to participate in or obtain from participating in the consensus mechanism of the network, or to maintain or obtain from maintaining the technical operation and security of the network. In this statement, we refer to these encrypted assets as' Covered Crypto Assets' and their mining activities on the proof of work network as' Protocol Mining '. Section 2 (a) (1) of the Securities Act and Section 3 (a) (10) of the Exchange Act respectively define the term 'securities' by listing various financial instruments, including' stocks', 'notes', and' bonds'. Due to the fact that covered crypto assets do not constitute any financial instruments explicitly listed in the definition of "securities", our analysis of certain transactions involving covered crypto assets in the context of protocol mining is based on the "Howey Test" established in the U.S. Securities and Exchange Commission v. W.J. Howey, Inc. case. The Howey test is used to analyze arrangements or tools that are not listed in the aforementioned statutory provisions, based on their 'economic reality'.