SEC’s Cryptocurrency Securities Criteria: Uncertainty and its Impact on the Industry

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The US SEC’s recent lawsuits against Binance and Coinbase have brought the number of cryptocurrencies the agency considers securities to 67. This raises questions about the criteria the SEC uses to determine which cryptocurrencies are securities, especially as there seems to be no clear pattern among the targeted cryptocurrencies.

In the lawsuits against Binance and Coinbase, 16 new cryptocurrencies were added to the list deemed securities. These include well-known coins like BNB, BUSD, Solana, Cardano, Polygon, Cosmos, The Sandbox, Decentraland, Axie Infinity, and COTI. Newcomers to the list are Chiliz (CHZ), Flow (FLOW), Internet Computer, Near, Voyager Token, and NEXO.

The SEC has previously called Algorand and LBRY Credit securities in different litigations against various crypto firms. Furthermore, the SEC is fighting Ripple in a high-profile case that will set a precedent for the mostly unregulated industry in the United States, determining whether XRP is a security or not.

However, the SEC admitted earlier this year that the sale of LBRY Credits (LBC) tokens in the secondary market does not constitute a security. This contradictory stance leaves the crypto community in the dark about the SEC’s true criteria for securities classification.

Market capitalization of the so-called “crypto securities” is over $100 billion, representing 10% of the entire crypto market cap. What makes a cryptocurrency a security, however, remains unclear.

A security is a negotiable financial asset that can be sold or traded in a financial market. According to US SEC Chair Gary Gensler, “everything other than Bitcoin” could be considered a security, yet many in the crypto industry have repeatedly asked for clearer regulations on this matter.

The SEC’s approach to randomly picking cryptocurrencies to label as securities has raised concerns about the future of crypto in the United States. Without a clear framework for determining what constitutes a security, the crypto community faces an ongoing battle with regulatory uncertainty.

In many cases, the SEC has sued exchanges for listing unregistered securities without issuing a notice to the cryptocurrency issuer. The outcomes of the latest lawsuits against Binance and Coinbase will have significant implications for the future of the industry in the United States.

As the crypto space continues to evolve rapidly, the need for clearer regulations becomes increasingly apparent. It remains to be seen whether the SEC will provide specific criteria for determining which cryptocurrencies are securities, or whether the sphere will be left with the ambiguous guidelines currently in place. Until that time, the future of crypto regulation in the United States appears uncertain.

Source: Coingape

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