It has been observed that the stance of the United States Securities and Exchange Commission (SEC) on cryptocurrency is not clear yet. Within 24 hours, the SEC launched another attack on investors after taking action against Kraken.
SEC’s token classification criteria: Controversy and concerns
According to a recent post by Cody Carbone, Vice President of Policy at Digital Chamber, on X (formerly Twitter), the SEC has compiled a list of several tokens and labeled them as securities based on social media statements and protocol upgrades. The listed tokens, such as $ADA, $ALGO, $ATOM, $FIL, $FLOW, $ICP, $MANA, $MATIC, $NEAR, $OMG, and $SOL, are commonly associated with various blockchain projects.
The recent move by the SEC has garnered everyone’s attention, and overall, cryptocurrencies are experiencing negative movement amid this action. As of writing, all these tokens are experiencing massive selling, and the crypto market is down by 3%.
The controversy revolves around the SEC’s attempt to widen the definition of securities to include the very subject of an investment contract, a move that goes against recent legal precedent. The Digital Chamber of Commerce, a prominent advocate for the blockchain and digital asset industry, has consistently argued that tokens that are not securities should not trigger registration requirements under the Exchange Act.
SEC’s action impact on innovation and growth
However, the SEC’s alleged continuation of regulatory overreach has raised concerns among investors and industry stakeholders who fear the stifling of innovation and growth in the rapidly evolving cryptocurrency market. Industry experts and crypto advocates are calling for a more nuanced and thoughtful approach to regulation, highlighting the need for clear guidelines that consider the unique characteristics of digital assets.
The ongoing legal battle between the SEC and Kraken is seen as a pivotal moment in shaping the regulatory landscape for cryptocurrencies. However, in the last few months, the SEC has experienced several losses, including XRP, Grayscale, and others. Despite these setbacks, the SEC once again raises questions about token security.