SEC Releases Statement Related to Proof-of-Work Mining Activities

The staff in the SEC’s Division of Corporation Finance (the “Division”) has released a statement to discuss some of its views on crypto asset “mining,” which refers to “certain activities on proof-of-work networks.” In particular, the statement focuses on “protocol mining,” which can be described as “the mining of crypto assets that are intrinsically linked to the programmatic functioning of a public, permissionless network, and are used to participate in and/or earned for participating in such network’s consensus mechanism or otherwise used to maintain and/or earned for maintaining the technological operation and security of such network.” The statement further indicates that the views expressed therein only apply to two types of protocol mining: (1) “self (or solo) mining” and (2) “mining pools.”

Importantly, the Division expresses its view that protocol mining activities do not need to be registered with the SEC because they do not constitute an offer or sale of securities under either the Securities Act of 1933 or the Securities Exchange Act of 1934.