SEC's Instructions for Cryptocurrencies Led by DOGE: Review! - Coin Bulletin

The Acting Chairman of the Securities and Exchange Commission (SEC), Mark T. Uyeda, has instructed his staff to review some previously published staff statements regarding cryptocurrency investments.

Uyeda’s instruction was given in line with the Presidential Decree No. 14192 titled “Increasing Welfare Through Deregulation”, based on the recommendations of the Government Efficiency Department’s (DOGE). This review includes an important document published in 2019 that assesses whether digital assets are classified as securities under the Howey test.

The Howey test helps to determine whether an investment contains an expectation of profit derived from the efforts of others. Recently, the SEC made statements suggesting that meme coins are largely exempt from securities laws.

Another important SEC announcement published in 2021 advised investors to be cautious with investment funds exposed to the Bitcoin futures market. This announcement highlighted the speculative nature of Bitcoin futures, particularly raising issues of market manipulation, liquidity shortages, and volatility risks for investment funds.

At that time, the SEC had expressed doubts about whether it could support investment products like ETFs without violating investor protections in the Bitcoin futures market. However, during the time that has passed, spot Bitcoin and Ethereum ETFs have accumulated tens of billions of dollars in value.

New regulations following cryptocurrency crises

Uyeda's review also includes another important document, which is the guidance published towards the end of 2022 stating that companies need to transparently disclose their exposure to cryptocurrency markets following major cryptocurrency bankruptcies. This guidance emphasizes that companies must announce potential risks such as custody, liquidity, reputational losses, and regulatory oversight to investors. Additionally, a Risk Warning dated 2021 had drawn attention by alerting investors to the "unique risks" associated with digital asset trading.

SEC personnel are reportedly undergoing a significant "migration" process within the agency. According to a recent report by Reuters, more than 600 employees have voluntarily accepted retirement offers and agreed to leave the SEC. This accounts for more than 12% of the agency's staff. An SEC spokesperson declined to provide any further comment beyond Uyeda's statement.