David Edwards
At the United States Securities and Exchange Commission’s first-ever Crypto Task Force roundtable, Duke Financial Economics Center visiting fellow Lee Reiners stated that Bitcoin should not be considered a security or an investment contract, citing its inherent decentralization.
“Bitcoin is not a security, it’s not an investment contract, because it is sufficiently decentralized,” Reiners remarked during the session, emphasizing the cryptocurrency’s unique structural attributes.
Unpacking Bitcoin’s Decentralization Framework
Reiners underscored the complexity in evaluating whether a digital asset is “sufficiently decentralized,” suggesting that decentralization is not a binary condition but rather exists across a broad spectrum. He referenced a 2024 report by the Commodity Futures Trading Commission (CFTC) which categorized decentralization across multiple dimensions: governance, asset distribution, user base, applications, data layers, network infrastructure, protocol mechanisms, and hardware.
Reiners cautioned that without comprehensive decentralization across all these vectors, it remains challenging to rule out whether profits derive from the entrepreneurial or managerial efforts of others—a key criterion under the Howey Test used to classify securities.
Contextualizing the SEC’s Regulatory Agenda
Friday’s roundtable was convened amid a broader push by the current U.S. administration to create tailored regulatory frameworks for digital assets. With the crypto market experiencing increased adoption and scrutiny, the SEC is revisiting how existing securities laws can be applied effectively within the digital asset ecosystem.
Joining Reiners at the roundtable were notable voices in crypto regulation and policy: John Reed Stark, former chief of the SEC’s Office of Internet Enforcement; Miles Jennings, general counsel for Andreessen Horowitz’s crypto division (a16z); and former SEC Commissioner Troy Paredes.
The event represents a shift toward more nuanced engagement between regulators and the digital asset sector, following recent high-profile legal actions and evolving market dynamics.
