Is doomsday coming for many alts? The SEC will likely rule almost every alt as a security
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Anyone who has been in this space for a while knows of the difficult relationship between crypto and the SEC, which stands for the Securities and Exchange Comission. The SEC is an independent government body government regulatory agency responsible for protecting investors, maintaining fair and orderly functioning of the securities markets, and facilitating capital formation. For clarity, a security is "a fungible, negotiable financial instrument that represents some type of financial value, usually in the form of a stock, bond, or option." A lot of the discussion has been concerned with which crypto tokens are securities and which are not, because the SEC is the federal regulator of the securities market. Quite some time ago, the SEC claimed that XRP is a security on 22 December 2020. That case is still ongoing and the SEC has been delaying it heavily. What happened to XRP? Well, after it was deemed a security, it went about -70% within a week and never really recovered (back then it was #3 in market cap): There have been other instances of the SEC highlighting projects as securities. Recently, for instance, the SEC said that 9 projects were securities, namely: AMP, RLY, DDX, XYO, RGT, LCX, POWR, DFX and KROM. These tokens have not done very well relative to the rest of the market (e.g. AMP is bleeding out). Now, it is entirely unclear what the SEC views as a security in the crypto space, because clear guidelines are missing. However, they are creating these guidelines, and the SEC will "soon" rule which token is a security and which is not. Gary Gensler said: "that the CFTC will regulate spot + futures for non-security tokens, and the SEC will regulate spot + issuance of tokens that are securities". This is consistent with the incoming bill of several senators. What does this mean? Sam Bankman-Fried from FTX writes: So BTC and its forks (e.g. Bitcoin Cash) and ETH and its forks are likely safe. But many other coins are on the chopping block. Many tokens will likely be ruled as securities and it is possible that this could have the same effect as it did on XRP, in essence shifting money away from those projects ruled as securities to those projects ruled as not being securities. What do you expect to be ruled as a security and what not? How big wil the effect be on this space? submitted by /u/Beyonderr |
