US SEC Extends Review Period for NYSE Arca’s Proposal to List and Trade Shares of Grayscale XRP Trust
On 11 March 2025, the United States Securities and Exchange Commission (US SEC) published a notice extending the review period for NYSE Arca’s proposed rule change to list and trade shares of the Grayscale XRP Trust under NYSE Arca Rule 8.201-E. The extension pushes the decision deadline to 21 May 2025 to allow the US SEC additional time to evaluate the regulatory implications and public feedback on the proposal before approving or rejecting it.
- The proposal was originally filed on 30 January 2025 and amended on 10 February 2025, to permit the listing of shares of the Grayscale XRP Trust, structured as a commodity-based trust offering indirect exposure to XRP.
- The Trust will operate under NYSE Arca Rule 8.201-E, which governs Commodity-Based Trust Shares backed by physical assets, including digital assets like XRP.
- The US SEC initially had 45 days from publication in the Federal Register to respond, with the original deadline set for 6 April 2025. The US SEC has now exercised its authority under Section 19(b)(2) of the United States Securities Exchange Act of 1934 to extend the review period to 21 May 2025.
- If approved, the Grayscale XRP Trust would join a growing cohort of exchange-traded products providing crypto asset exposure within the US securities framework.
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US SEC Reviews Nasdaq Proposal to List and Trade Shares of Grayscale Hedera Trust (HBAR)
On 11 March 2025, the United States Securities and Exchange Commission (US SEC) published a notice initiating its formal review of Nasdaq’s proposal to list and trade shares of the Grayscale Hedera Trust (HBAR) under Nasdaq Rule 5711(d). The proposed exchange-traded product (ETP) is structured to provide indirect exposure to Hedera’s native digital asset, HBAR.
- The Grayscale Hedera Trust is designed as a passive investment vehicle, with no engagement in active trading or derivative usage.
- The Trust will not be registered under the United States Investment Company Act of 1940, and share creation and redemption will be conducted solely in cash.
- Coinbase Custody Trust Company, LLC will serve as custodian of the Trust’s digital assets, while Grayscale Investments, LLC is the sponsor, Delaware Trust Company will act as trustee, and Vigilant Compliance, LLC serves as administrator.
- The NAV of the Trust will be calculated daily using the CoinDesk Hedera Reference Rate, which aggregates volume-weighted prices across eligible spot trading venues.
- The proposed listing must comply with the requirements of Section 6(b)(5) of the United States Securities Exchange Act of 1934 to ensure that the exchange rules are designed to prevent fraud, promote fair trading, and protect investors.
- The US SEC has requested public comment on whether the proposal addresses risks of market manipulation, transparency, and investor protection, with a review timeline of 45 days (extendable to 90 days) from publication in the Federal Register.
- The Trust’s structure prohibits in-kind redemptions, which differentiates it from traditional ETPs and requires regulatory considerations under Rule 19b-4 and the SEC’s commodity-based trust share framework.
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US SEC to Host Roundtable on Artificial Intelligence in Financial Industry on 27 March 2025
On 20 March 2025, the United States Securities and Exchange Commission (US SEC) announced the full agenda and panel line-up for its Artificial Intelligence Roundtable, scheduled for 27 March 2025 in Washington, D.C. The event will be held for discussions on the regulatory, operational, and ethical implications of artificial intelligence (AI) within the financial industry.
- The roundtable will be hosted at the US SEC’s headquarters and run from 9:00 a.m. to 4:15 p.m. EST, featuring four panel discussions on AI’s costs and benefits, cybersecurity and fraud prevention, governance and risk, and future trends.
- Opening remarks will be delivered by Acting Chairman Mark T. Uyeda, Commissioner Hester Peirce, and Commissioner Caroline Crenshaw, framing the US SEC’s regulatory priorities regarding AI integration in financial services.
- Participants include representatives from JP Morgan, Citadel Securities, Nasdaq, BlackRock, FINRA, the Department of Treasury, Amazon Web Services, and academia, moderated by US SEC staff from core regulatory divisions.
- Discussions will address AI’s application in trading and compliance, ethical use standards, supervisory frameworks, and its role in maintaining fair, orderly, and efficient markets under the United States Securities Exchange Act of 1934.
- The US SEC is soliciting public input on the use of AI in financial markets via its Artificial Intelligence Roundtable event page.
- Public attendance is available in-person by registration or virtually via livestream on www.sec.gov.
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US SEC Division of Corporation Finance Issues Statement Clarifying Securities Law Status of Proof-of-Work Mining
On 20 March 2025, the United States Securities and Exchange Commission’s (US SEC) Division of Corporation Finance issued a formal statement providing legal clarity on the application of US federal securities laws to crypto asset mining, specifically activities involving proof-of-work (PoW) networks. The statement outlines that self-directed PoW mining—defined as “Protocol Mining”—does not, under current legal interpretation, constitute a securities offering under the United States Securities Act of 1933 or the United States Securities Exchange Act of 1934.
- The guidance applies to mining activities involving “Covered Crypto Assets” native to public, permissionless PoW networks where miners receive protocol-determined rewards.
- The Division of Corporation Finance assessed PoW mining under the Howey test and concluded that miners do not meet the third prong—“expectation of profits derived from the efforts of others.”
- According to the Division of Corporation Finance, in self-mining, the act of contributing computational power to validate transactions is considered a ministerial function, not reliant on third-party managerial efforts.
- In mining pools, although coordination exists, rewards are allocated based on proportional resource contribution and do not meet the “common enterprise” or “managerial effort” requirements of the Howey framework.
- The statement is non-binding and does not constitute an official rule or legal determination by the US SEC. It represents the Division of Corporation Finance’s current view and is subject to change based on differing facts, particularly in variations of pool governance or alternative PoW protocols.
- The Division cautions that its analysis is limited to the specific economic realities described and does not extend to other mining structures or token distribution models.
- Legal practitioners and regulated entities are advised to evaluate their operations case-by-case and may seek further clarity by submitting formal interpretive requests to the Office of Chief Counsel.
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US SEC Commissioner Crenshaw Critiques Flawed Crypto Mining Guidance in ‘The Flame in Plato’s Cave’ Statement
On 20 March 2025, United States Securities and Exchange Commission (US SEC) Commissioner Caroline A. Crenshaw issued a pointed dissent titled “The Flame in Plato’s Cave”, in response to the non-binding staff statement issued by the US SEC’s Division of Corporation Finance on the securities law implications of Proof-of-Work (PoW) mining. The critique challenges the analytical soundness of the staff’s position and discusses the legal ambiguities embedded within the statement, cautioning against oversimplified interpretations of securities law in the context of crypto mining.
- Commissioner Crenshaw strongly refuted and stated that the staff statement rests on an assumed conclusion, that PoW miners do not expect profits from the efforts of others, thereby bypassing a fact-based application of the Howey test, which is legally required.
- The statement states that the staff’s guidance is limited to PoW “generally” and explicitly avoids applying its analysis to specific PoW protocols or mining arrangements, rendering the statement vague and non-determinative.
- The Commissioner references footnote 9 of the staff statement to state that any legal conclusion must still be grounded in a case-by-case facts-and-circumstances analysis, particularly where mining pools, compensation structures, and managerial roles are involved.
- Drawing parallels to the US SEC’s earlier statement on meme coins, Crenshaw warns of a recurring pattern where staff advisories include critical caveats that are buried in footnotes and easily overlooked, leading to misinterpretation by the public and media.
- In her statement she criticises the proliferation of informal guidance, ten crypto-related staff statements in nine weeks, without a cohesive regulatory framework or US SEC’s vote, stating that such an approach fosters regulatory uncertainty and weakens the integrity of US securities law.
- Commissioner Crenshaw strongly stated that the definition of a security must not be diluted through interpretive shortcuts, particularly when the financial system depends on consistent enforcement of investor protections under established legal standards.
- Crenshaw’s dissent shows the mounting concern within the US SEC over ad hoc regulatory communication and the need for formal rulemaking or adjudication to ensure legal clarity in the digital asset sector.
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US SEC Opens Dialogue on Crypto Asset Classification at Inaugural Crypto Task Force Roundtable
On 21 March 2025, the United States Securities and Exchange Commission (US SEC) held the first roundtable of its Crypto Task Force at its Washington, D.C. headquarters, opening formal deliberations on the legal classification of crypto assets. Acting Chairman Mark T. Uyeda delivered the opening remarks, discussing and elaborating the regulatory uncertainty facing the crypto industry and advocating for a more structured compliance framework.
- Acting Chairman Uyeda traced the origin of crypto regulation issues to the 2008 Bitcoin white paper and noting persistent legal ambiguity surrounding how digital assets fit within US federal securities laws.
- His remarks pinpointed the challenges of applying the Howey test, especially regarding divergent interpretations of core elements like the “efforts of others” and pooling of investor profits.
- Uyeda cited conflicting judicial interpretations from the Second, Fifth, Eleventh, and D.C. Circuits.
- Drawing from prior regulatory experiences, Uyeda called for the issuance of formal guidance or rulemaking, rather than relying on enforcement, to provide clarity, as has been done in areas like fiduciary duties and investment contracts.
- The roundtable under the US SEC’s Crypto Task Force will work to resolve definitional disputes and establish a legally sound framework for digital asset compliance.
- The roundtable is a way forward to US SEC’s responsibility under the United States Securities Act of 1933 and the United States Securities Exchange Act of 1934 to ensure fair, orderly markets and protect investors through clear, proactive regulation and imples a strategic pivot toward rule-based clarity in digital asset oversight
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US SEC Commissioner Caroline Crenshaw Statement at US Crypto Roundtable: Urges Caution and Investor Protection in Crypto Regulatory Debate
On 21 March 2025, United States Securities and Exchange Commission (US SEC) Commissioner Caroline A. Crenshaw delivered the inaugural speech at the opening address of Crypto Task Force’s roundtable in Washington D.C., held under the theme “Defining Security Status.” Her remarks elaborated on the need to preserve the foundational principles of US securities law while exploring regulatory clarity around crypto assets.
- Commissioner Crenshaw framed the debate around two core questions: ‘whether crypto assets fall within the definition of securities under existing law, and whether they should?’
- In her statement she held on the importance of maintaining the integrity of the statutory definition of “security,” stating that undermining this definition could weaken the broader investor protection framework underpinning the US capital markets.
- With the Crypto capital markets valued at over $120 trillion USD in USA, she noted their strength and trustworthiness stem from decades of jurisprudence and regulatory structure, which should not be compromised for regulatory expediency.
- While acknowledging the argument that current laws may not fully accommodate crypto, she cautioned against creating exemptions or legal carve-outs that could dilute existing protections.
- Commissioner Crenshaw raised compliance questions to guide regulatory reform such as: the extent of the US SEC’s statutory authority, whether reforms preserve flexibility and investor protections, and how proposed frameworks ensure competitive neutrality and national security safeguards.
- Commissioner Crenshaw’s position is a clear call to uphold investor protection as the Commission navigates crypto regulation, urging that any reform must be grounded in the US SEC’s statutory mandate without compromising the legal architecture of US securities law.
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US SEC Commissioner Hester Peirce Calls for Regulatory Reboot at Inaugural Crypto Roundtable
On 21 March 2025, Commissioner Hester M. Peirce of the United States Securities and Exchange Commission (US SEC) delivered opening remarks at the first Crypto Task Force roundtable, marking the launch of the Spring Sprint Toward Crypto Clarity initiative.
- Commissioner Peirce described the roundtable as a symbolic “restart” of the Commission’s regulatory posture toward crypto, following the formation of the Crypto Task Force announced by Acting Chairman Mark T. Uyeda in January 2025.
- She raised foundational legal questions critical to crypto classification, including the definition of a security, whether such status is permanent, and how decentralisation influences regulatory analysis.
- Peirce discussed the practical need to construct a coherent taxonomy for crypto assets, noting that definitional uncertainty has stalled regulatory progress and innovation.
- Drawing on a metaphor of repairing a shed and a tractor, she strongly stated the need to resolve foundational issues before building an overarching regulatory system.
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US SEC Crypto Task Force Announces Four Additional Public Roundtables on Digital Asset Regulation
On 25 March 2025, the United States Securities and Exchange Commission (US SEC) announced in Release No. 2025-57 that its Crypto Task Force will convene four additional public roundtables to advance regulatory discourse on digital assets. These sessions will build on the United States Crypto Task Force’s ongoing effort to clarify legal obligations for crypto-related entities and to align enforcement, disclosure, and registration frameworks with evolving market realities.
- The roundtables will take place at the US SEC headquarters in Washington, D.C., and will also be livestreamed via SEC.gov.
- The scheduled dates for the next Crypto Roundtables along with the theme of discussion are:
- On 11 April 2025: Crypto Roundtable on Tailoring Regulation for Crypto Trading
- On 25 April 2025: Crypto Roundtable on Crypto Custody – Key Legal Considerations
- On 12 May 2025: Crypto Roundtable on Tokenisation and Integration with Traditional Finance
- On 6 June 2025: Crypto Roundtable on Regulating DeFi within the US Legal Framework
- Participation is open to legal, technical, and compliance professionals. Interested parties may apply as panelists by contacting crypto@sec.gov with the subject “Potential Panelist.”
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