Mining is a vital part of the cryptocurrency industry today. While some industry followers believe that crypto mining will go away in the not so distant future, it remains an active pursuit for individuals and companies to mint digital money using racks of computers.
In the US, the Securities and Exchange Commission (SEC) has stated that every initial coin offering (ICO) was and is a security. Or just about.
SEC CorpFin Director Bill Hinman publicly stated that Ethereum is not a security but, importantly, did not pass judgment on its issuance.
So if every crypto is a security, what about crypto mining and the miners that mint these digital assets?
Good question and Templum has publicly requested the SEC issue guidance on the pressing question.
Templum, a registered broker-dealer and approved alternative trading system (ATS) in the digital asset sector, has submitted a letter to the SEC on digital asset mining. Templum co-founders Vince Molinari and Chris Pallotta state in the letter:
“Chairman Clayton has stated that nearly every ICO has involved the sale of a security. However, it is unclear if miners of digital assets that are securities be required to register as a broker-dealer under the Securities and Exchange Act of 34. We encourage the SEC to provide formal guidance to the industry on this issue.”
In the current regulatory environment, the status of crypto miners is unclear. But if these miners are manufacturing securities and must be registered as broker-dealers, the ramifications may be profound.
While many crypto-miners operate outside the confines of US borders there are some that operate under US law. This publication is not aware of any crypto miners that are also FINRA regulated broker-dealers.
Templum recommends the following:
“We request the SEC provide guidance as to when miners of digital assets that are securities could be deemed to be acting as broker-dealers. It is unclear whether or when miners of digital assets may be deemed to be engaged in the business of effecting transactions in securities for the account of others. We believe that the SEC should give these issues heightened attention in order to help guide the industry as to the application of existing law.”
The Templum Letter to the SEC is embedded below.