The SEC Abandons its Definition of Cryptocurrencies

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The US Securities and Exchange Commission (SEC) has removed its first formal definition of “digital assets” from its hedge fund rulebook.

This clause is absent in the approved rules, however, a footnote notes that the Commission is still working on a definition and has proposed adding it to the Form PF Glossary of Common Terms.

The original version of the document referred to digital assets as “assets that are issued and transferred using distributed ledger or blockchain technology, including so-called “virtual currencies,” “coins,” and “tokens.”

In September 2022, SEC Chairman Gary Gensler suggested that cryptocurrencies offering the potential of staking may fall under the definition of securities based on the Howey test.