The price of Bitcoin experienced a rapid decline during discussions related to treasury bonds by Bessent. Concurrently, SEC Chairman Paul Atkins was delivering remarks on which altcoins could be considered securities. Despite supportive regulations for cryptocurrencies this year, macroeconomic developments have led to significant disruptive downturns.
Which Altcoins Are Considered Securities?
Former SEC Chairman Gensler claimed all were securities, but with Trump’s administration, there was a shift. The new SEC Chairman is seen as a crypto-friendly figure, believing that a large portion of the market does not fall under the SEC’s jurisdiction. In his recent statements, SEC Chairman Paul Atkins clarified that network tokens and meme coins are not considered securities.
He emphasized that only assets promising clear and explicit management commitments could be classified as securities. Atkins also expressed that cryptocurrency assets providing practical functions, like tickets, memberships, or badges, are not deemed securities.
Navigating the Legal Definitions
Atkins mentioned the possibility of developing a token taxonomy based on the longstanding Howey investment contract securities analysis, recognizing the constraints within current laws and regulations. This evaluation is anticipated in the coming months by the Commission.
He further noted that most crypto tokens traded today are not in themselves securities. However, it is possible for a particular token to have been sold as part of a securities offering through an investment contract. This isn’t a radical idea but a straightforward application of securities laws.
Securities laws list known instruments like stocks, notes, and bonds, along with an open-ended category termed “investment contracts.” This term delineates the relationship between parties, not attaching an indelible label to an object.
Investment contracts can be fulfilled and expired, as they don’t last indefinitely even if the contract’s subject continues to trade on the blockchain. Certain individuals have argued that if a token is subject to an investment contract, it remains a security endlessly.
This flawed perspective assumes every subsequent transaction everywhere is considered a securities transaction. Atkins finds this view challenging to reconcile with the letter of the law, Supreme Court jurisprudence, or common sense.