In March, the SEC clarified that most proof-of-work mining isn’t a securities transaction, easing concerns for miners. Ripple nears a settlement with the SEC, but legal precedent remains unclear. Congress overturned IRS crypto reporting rules, signaling shifting sentiment. Stablecoin legislation gained bipartisan support. The SEC Crypto Regulation framework evolves with industry-friendly regulatory shifts. Investors must stay vigilant as the market matures, adapting to legal and macroeconomic trends.

Key-Takeaways:

• Most proof-of-work mining qualifies as a non-securities-related operation, according to the SEC Crypto Regulation, easing concerns for miners and service providers.
• After five years of litigation, Ripple announced a potential statement with the SEC, but the crypto industry still lacks clear legal precedent.
• Congress overwhelmingly rejected the IRS’s report, which could have affected many in the industry.
• Regulators showed better signs that they were receptive to getting to know the crypto industry, and a bipartisan group of stablecoin legislation was advanced by the Senate Banking Committee.

Ripple Announces Potential Settlement with SEC

Nearly five years after the legal battle began, Ripple announced on March 19 that the SEC is likely to drop its appeal against the company. The resolution of the case brings the case back to life; it was filed in 2020 during Jay Clayton’s SEC chairmanship. Details are still to be revealed about the settlement, which still needs approval from SEC commissioners.

Ripple is also considering a cross-appeal at the Ninth Circuit regarding institutional investor sales. However, despite this potential resolution, there remains no legal precedent in the crypto industry on how the Howey test applies to digital assets.

Senate Makes Progress on Stablecoin Legislation

The GENIUS Act was advanced by the Senate Banking Committee last week with bipartisan support. Five Democrats supported the bill’s passage through committee, which passed 18-6. Senator Elizabeth Warren’s amendments did not gain traction.

According to Alameda Research, stablecoin regulation hearings have continued in both chambers in recent weeks. Rep. Ro Khanna remains optimistic that stablecoin legislation will pass in 2021. According to him, 70-80 House Democrats consider this to be essential for maintaining American dollar dominance in the world.

Congress Overturns IRS Crypto Broker Reporting Rules

On March 11, Congress overwhelmingly voted to remove the IRS’s cryptocurrency broker reporting rules, signaling a shift in legislative sentiment. Both the House voted 292-132 and the Senate 70-28 in favor of overturning these regulations. But the rules, finalized during President Biden’s term, would have made many crypto attendees reporting entities.

The rules were critical of, they argued, being too broad to, among other things, capture wallet providers, DeFi protocols, validators, and even internet service providers. President Trump promised to sign the legislation into law, immediately.

Additional Regulatory Developments

The likely abandonment of proposed Reg ATS rule changes meant to expand the definition of an ‘exchange’ to encompass DeFi protocols was signaled to the industry by Acting SEC Chair Mark Uyeda. At the same time, the CFTC removed its previous advisory on the registration requirement of the swap execution facility.

This may indicate a more lenient approach toward developers of decentralized platforms. Another good news is that OFAC took Tornado Cash protocol addresses off its sanctions list, good news for software developers and privacy advocates alike.

Conclusion: SEC Crypto Regulation

Key advocacy groups in the crypto industry changed leaders at their helm, as Amanda Tuminelli replaced CSoney and Cody Carbone rose to the rank of CEO of the Digital Chamber. For the first time, the SEC Crypto Regulation has launched a crypto roundtable, marking an initial step toward greater public dialogue. In addition, the SEC also provided a no-action letter that stated that issuers of Rule 506(c) offerings can base their self-certification of status as an accredited investor in certain situations.