SEC
The U.S. Securities and Exchange Commission—the federal agency responsible for regulating securities markets, including determining whether cryptocurrencies qualify as securities subject to federal regulation.
Last updated: January 5, 2025
What is the SEC?
The SEC (Securities and Exchange Commission) is the U.S. government agency that regulates securities markets and protects investors. In crypto, the SEC determines whether digital assets qualify as securities and has brought enforcement actions against numerous crypto projects and exchanges.
SEC’s Role in Crypto
Key Responsibilities
- Determine if tokens are securities
- Regulate crypto exchanges offering securities
- Enforce securities laws
- Protect investors from fraud
The Howey Test
The SEC uses this test to determine if something is a security:
- Investment of money - You put in capital
- Common enterprise - Pooled with others
- Expectation of profit - You expect returns
- From efforts of others - Based on third party work
If all four apply, it’s likely a security.
SEC Classification Impact
| Classification | Requirements | Examples |
|---|---|---|
| Security | Registration, disclosure | Most ICO tokens |
| Commodity | Less regulation | Bitcoin, Ethereum |
| Currency | Different rules | Stablecoins (debated) |
Major SEC Crypto Actions
Enforcement Actions
- Ripple (XRP): Ongoing lawsuit since 2020
- LBRY: Token ruled security
- Various ICOs: Multiple settlements
Exchange Actions
- Scrutiny of major exchanges
- Requirement for proper licensing
- Delistings of securities tokens
What SEC Regulation Means
For Projects
- Must register tokens or qualify for exemption
- Ongoing disclosure requirements
- Significant compliance costs
- US market restrictions
For Exchanges
- Cannot list unregistered securities
- Must register as securities exchange
- KYC/AML requirements
- Regular reporting
For Investors
- Some tokens unavailable in US
- Greater protections (theoretically)
- Clearer rules (eventually)
- Tax implications
SEC vs CFTC
| Agency | Regulates | Crypto Assets |
|---|---|---|
| SEC | Securities | Most tokens |
| CFTC | Commodities | Bitcoin, ETH |
Turf battles between agencies create regulatory uncertainty.
Exchange Compliance
Major exchanges and SEC compliance:
- Coinbase: US-regulated, conservative listings
- Kraken: US-registered, compliant
- Gemini: New York trust company
International exchanges may restrict US users due to SEC rules.
Future of SEC Crypto Regulation
Potential Developments
- Clearer token classification rules
- Exchange licensing framework
- Stablecoin regulations
- ETF approvals
What to Watch
- Court case outcomes (Ripple, etc.)
- New SEC leadership positions
- Congressional legislation
- Industry lobbying efforts
Stay informed about regulatory developments as they significantly impact which cryptocurrencies are available to US investors.
Ready to Start Trading?
Now that you understand sec, explore the best exchanges to begin your crypto journey.