SEC Remains Vigilant in Regulating Cryptocurrency with Unprecedented Enforcement Actions, Reports The Legal Intelligencer

The U.S. Securities and Exchange Commission’s (SEC) actions related to cryptocurrency have significantly increased in 2023, showing a growth of over 50% compared to 2022. Despite the SEC’s continued emphasis on cryptocurrency enforcement, the debate over the role of the SEC in regulating cryptocurrencies has been ongoing. Despite this debate, we anticipate that the SEC will maintain a high level of enforcement activity in this area in 2024, although the classification of cryptocurrency as a security or another asset remains unresolved.

The Legal Landscape

SEC Chair Gary Gensler has expressed his belief that the current securities framework appropriately regulates cryptocurrencies. According to Gensler, most cryptocurrencies meet the criteria of securities under the Howey test. Under the Howey test, a transaction is deemed a security if it satisfies the following four conditions:

• money is invested;
• there is an expectation of profit for the investor;
• the investment is part of a common enterprise; and
• profits are derived from the efforts of others.

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