During the week of mining on CoinDesk, experts speculated about the relationship between the US Securities and Exchange Commission (SEC) and bitcoin miners. They mentioned that organizations can get into trouble. The experts recalled that regulators consider BTC and other cryptocurrencies with a proof-of-work (PoW) mechanism as a commodity. But institutions still “might trip over securities laws if they’re not careful.”
Bitcoin and Proof-of-Work tokens are commodities, not securities. The fact is that they do not have a central body that “collects capital in exchange for the promise of future income.” The health chain is a protocol, not a platform, product, or ecosystem. However, this does not mean that bitcoin miners are completely immune from potential claims from the SEC.
The researchers stressed: “It is actually very easy to wrap commodity BTC in arrangements that are securities contracts.” The recent ruling in the SEC v. Ripple case may provide a clear picture of the relationship between the token as such and the agreements, transactions, and contracts surrounding it.
Industry participants may be surprised to learn that the very first SEC action on the cryptocurrency sector, dating back to 2015, targeted BTC miners.
We are talking, in particular, about “cloud mining”. Unfortunately, many of these service providers initially chose the wrong business models. A typical contract offered customers a certain amount of computing power for a set periodic fee. However, this mechanism allowed for fraud. “The reputation of cloud mining has been a black mark on our industry,” said Kent Halliburton, President and COO of Sazmining. “So many people have been hurt. If you are selling hashrate, then you are selling securities.”
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