The U.S. Securities and Exchange Commission (SEC) is preparing to review several internal staff guidelines that impact cryptocurrency industry supervision.
This action aligns with the latest regulatory relaxation executive order from Donald Trump. It also follows the guidelines of the government efficiency department (DOGE) led by Elon Musk.
SEC to Review Howey Test and Investment Contract Framework
On April 5th, SEC Acting Chair Mark Uyeda mentioned that the upcoming review could lead to changes or complete withdrawal of some statements. He emphasized that the agency's goal is to maintain guidelines that align with current priorities.
"The purpose of this review is to identify staff statements that should be modified or withdrawn to align with the agency's current priorities," the commission stated.
One of the main targets of this reassessment is the SEC's current framework for determining whether digital assets are classified as securities. This guidance heavily relies on the decades-old Howey Test.
It also reflects the views of former SEC official Bill Hinman shared in a 2018 speech. Hinman argued that the degree of decentralization is more important than how tokens were initially sold.
This perspective influenced several enforcement decisions, including the XRP-related legal dispute with Ripple. However, many in the industry argue that the Howey Test is not suitable for modern blockchain technology.
This development could bring dramatic changes to how crypto assets are evaluated. Cryptocurrency analyst Jesus Martinez believes removing or modifying the current framework could be a crucial turning point for U.S. retail investors.
He argues that regulatory constraints have long prevented ordinary users from participating in projects like launchpads and node operations. These platforms are often only accessible through foreign IDs or institutional workarounds.
Martinez says dismantling these outdated rules could provide a level playing field for U.S. investors.
"This has long been detrimental to retail, and we should prioritize U.S. citizens. This is a big step in that direction," Martinez concluded.
Beyond the Howey-based framework, the SEC is reviewing several other documents. One is a notice addressing regulatory concerns about mutual funds investing in Bitcoin futures.
The financial regulatory agency is also reviewing risk warnings from its examination department. These warnings caution that digital assets pose inherent investor risks, including regulatory uncertainty and cybersecurity threats.
Additionally, the commission is reassessing whether state-chartered banks and trust companies can act as qualified custodians under the SEC's custody rules.
The cryptocurrency community believes the SEC's comprehensive reassessment signals a shift towards a more modern and flexible regulatory approach. This transition could reshape the cryptocurrency environment for both retail investors and institutional participants.
