Everything to know about the list of tokens that the SEC says are securities

TL;DR Breakdown

  • The US Securities and Exchange Commission (SEC) has publicly listed a series of crypto assets it deems as securities, applying the Howey Test.
  • Prominent tokens listed include XRP, Decentraland (MANA), and Beaxy Token (BXY).
  • Binance and its CEO, Changpeng Zhao, face SEC scrutiny for alleged securities law violations.

In the fluid universe of cryptocurrency, the US Securities and Exchange Commission (SEC) has recently sharpened its perspective on regulations, laying out a clear delineation of tokens it deems to be securities.

The declaration came in April in the form of a list that was shared publicly by the Commission’s five members, an aggregation that comprises high-profile crypto assets that are considered to have been put forth as unregistered securities.

The Howey Test: The regulatory litmus test

For the classification of these digital assets, the SEC employed the widely accepted Howey Test.

This established legal precedent comes with four tenets: the act of investing money, participation in a common business, harboring a reasonable expectation of profits, and the derivation of those profits from the efforts of other parties.

A token that checks all of these boxes is officially considered a security by the regulatory body.

In this realm, there are certain instruments that are invariably classified as securities, while others can evolve into securities based on their manner of offering.

As an illustration, a company’s equity is perpetually deemed a security, regardless of how it’s offered. Conversely, even a commodity, for instance, a fraction of an orange grove, could transition into a security if it aligns with the Howey Test’s criteria, thereby falling into the category of an investment contract.

Crypto assets in the spotlight

The SEC’s newly unveiled list incorporates numerous well-known crypto tokens that are thought to have been circulated as unregistered securities.

CryptoQuant founder Ki Young Ju noted an interesting trend that despite an SEC lawsuit against leading cryptocurrency exchange platform Binance, and its CEO, Changpeng Zhao, for alleged violations of securities law, significant withdrawals from the platform haven’t been reported. On the contrary, user balances appear to be incrementing.

In an intriguing turn of events, the SEC’s list includes a diverse range of tokens including XRP (XRP), Telegram Gram Token (TON), LBRY Credits (LBC), Decentraland (MANA), DASH (DASH), Power Ledger (POWR), OmiseGo (OMG), Algorand (ALGO), Naga (NGC), TokenCard (TKN), IHT Real Estate (IHT), Kik (KIN), Salt Lending (SALT), Beaxy Token (BXY), DragonChain (DRGN), Tron (TRX), BitTorrent (BTT), Terra USD (UST), Luna (LUNA), Mirror Protocol mAssets (various symbols), Mirror Protocol (MIR), Mango (MNGO), Ducat (DUCAT), Locke (LOCKE), EthereumMax (EMAX), Hydro (HYDRO), BitConnect (BCC), Meta 1 Coin (META1), Rally (RLY), DerivaDAO (DDX), XYO Network (XYO), Rari (RGT), Liechtenstein Cryptoasset Exchange (LCX), DFX Finance (DFX), Kromatica (KROM), and FlexaCoin (AMP).

Under the leadership of Chairman Gary Gensler, the SEC has been unambiguous about its reservations concerning cryptocurrencies. Gensler’s pointed stance and persistent call for comprehensive crypto regulations have led to perceptions of his somewhat critical view of the digital asset industry.

This recent declaration by the SEC seems to extend Gensler’s efforts for regulatory transparency in the crypto sphere, a realm he regards as fraught with fraud and potential risks to investors.

The SEC’s actions also underscore the formidable journey ahead for cryptocurrency firms. With a complex labyrinth of financial regulations to navigate, these entities must ensure strict compliance with the guidelines stipulated by the agency, or consider eloping.

This evolving landscape promises to remain a hotbed of debate, with industry observers eagerly anticipating the future impact on the world of digital currencies.

Disclaimer: The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decision.

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