SEC Reverses Stance on Labeling Digital Assets

The US Securities and Exchange Commission (SEC) removed its first formal definition of "digital asset" from its latest hedge fund rule, stating that it is still considering the term and not adopting it at this time. The SEC has been actively considering crypto matters, including reopening a previously proposed rule redefining the term "exchange" to include decentralized finance (DeFi). The agency's decision to remove the definition of digital assets from the hedge fund rule may be due to concerns that any recognition of their uniqueness as a novel product weakens their litigation stance that digital assets are securities and subject to SEC securities laws.