3 hours ago
The US Securities and Exchange Commission (SEC) on Tuesday issued an interpretation clarifying which types of cryptocurrencies are considered securities and how a “non-security” digital asset could meet certain conditions to become an investment contract.
The SEC’s new interpretation – which the US Commodity Futures Trading Commission also joined – classifies crypto tokens into five categories: digital commodities, digital collectibles, digital tools, stablecoins, and digital securities, specifying that federal securities laws only apply to digital securities.
The SEC also stated that a “non-security” crypto asset could become subject to securities laws if an issuer offers it by promoting investment in a common enterprise from which a purchaser could expect to profit.
Under its chair, Paul Atkins, the SEC has outlined sweeping plans to overhaul capital markets regulations to accommodate cryptocurrencies and blockchain-based trading. Atkins has previously said that most cryptocurrencies are not securities, a designation that requires registration with the SEC along with certain disclosures.
The crypto sector has long argued that existing US regulations are inappropriate for cryptocurrencies and has called for Congress and regulators to establish new rules clarifying when a crypto token is a security, commodity, or falls into another category, such as stablecoins.
Also on Tuesday, Atkins presented a safe harbor proposal for cryptocurrency companies that would make it easier to sell tokens and raise funds. He suggested the SEC consider a “fit-for-purpose startup exemption,” allowing crypto entrepreneurs to raise a certain amount of money or operate for a specific period while being exempt from the agency’s rules.
“It’s way past time for us to stop diagnosing the problem and start delivering the solution,” Atkins said during remarks at an event held by the Digital Chamber crypto trade group in Washington DC.
Atkins indicated that the SEC will release a proposal on crypto safe harbors for public comment in the coming weeks. He also noted that the agency’s so-called innovation exemption, which he has previously said will exempt companies from securities laws to enable new business models, will be incorporated into the forthcoming proposal.
