The recent legal actions taken by the SEC against prominent crypto platforms have sparked a significant debate regarding the classification of digital tokens as securities.
As the United States leads the regulatory crackdown on cryptocurrencies, this case becomes a crucial test of the SEC’s jurisdiction over the industry.
The SEC alleges that Coinbase allowed users to trade at least 13 crypto assets that should have been registered as securities.
Coinbase and other industry players vehemently deny listing any securities.
To determine whether crypto assets should be classified as securities, the SEC relies on the Howey Test.
Furthermore, courts have concluded that investors participate in a common enterprise when their funds are pooled by the token issuer and used for system development.
The outcome of the SEC’s case against Ripple Labs over the cryptocurrency XRP holds substantial implications for the classification of crypto assets as securities.
Bitcoin is generally not considered a security due to its anonymous and open-source origins.