Bitcoin is one of the few digital currencies to be classified as a “commodity” by US regulators. Other digital assets and tokens have not been classified in the same way, if at all. Developers, investors, and other entities have all raised this issue. Authorities in the United States have been unable to deliver a definitive response.
Regulatory bodies are cracking down on some of the top crypto assets in the markets. While Ripple and SEC are in a lengthy tussle of whether XRP is a security or not, Binance has been getting various security warnings.
This has now sparked a debate on which token is a security. Investors are now intrigued to know whether their tokens can be cracked down by regulators.
Now let’s see what is the textbook definition of “Security” and how else is it interpreted.
What is a “Security” ?
The Securities Exchange Commission explains Securities as – security is anything that is sold or transferred for a value in which the purchaser is relying on the seller to increase the value of the thing purchased.
Now comes the interpretation- Attorney Jermey Hogan says, The SEC has successfully argued that just marketing a cryptocurrency in a particular way can be proof of a shared venture for profit between the seller and the buyer. The SEC also considers ICOs as sales of securities.
Legal expert Attorney Jermey Hogan has taken a look at DOGE, Cardano, XRP, Polkadot, and Uniswap’s chances of a similar crackdown. His findings say –
ADA hodlers can sit back and relax as ADA is mostly free from the crutches of regulators. Cardano’s ICO was held in Japan, not the USA, Hogan also notes, about 95% of the ICO was to Japanese nationals, ADA then made its way to America via exchanges. Hence, dodges the bullet.
It’s good news for Doge too. Dogecoin never had an ICO at the time of incubation. Within a week of the project’s inception in 2013, 5% of DOGE coins had been mined. After a year, 95% of the DOGE coins had been mined.
The Attorney said I think the SEC would only be made more of a joke if it sued a joke coin so I see no problems on the horizon.
Polkadot is in a bit of a catch. The Polkadot platform was conceived and built by the Web3 Foundation, which held many initial coin offerings (ICOs) in 2017 and supposedly raised about $200 million. These ICOs occurred before the Polkadot platform was fully operational.
This suggests that early investors expected the Foundation’s efforts to influence the DOT price. Polkadot is now firmly on the SEC’s radar.
Polkadot’s redeeming factor is that the Foundation is a non-profit organization making the SEC’s fury less likely to fall on it. The project also claimed in its early paperwork that it would not sell DOT tokens to Chinese or American investors.
Uniswap is a potential token to be on the radar too. Previously an attorney named Stephan Palley had said that Uniswap’s native token is almost probably security.
However, Uniswap’s saving grace is that UNI tokens were never sold, instead were distributed via an airdrop. As a result, if Uniswap Labs ever loses to the SEC, it will have no profits to forfeit.
With this, which token or platform will the watchdog hound next after its ever-lasting battle with Ripple is to be watched out for. With The US Senate cracking down on crypto and planning to enforce regulations the crypto markets are in for a bumpy ride for sure.