- Lack of Definition for 'Crypto Asset Securities'
- Criticism from Ripple
- Legal Battles Involving the SEC
The US Securities and Exchange Commission (SEC) recently issued a warning to investors about scams involving 'crypto asset securities,' sparking a debate over the legal status of the term.
Lack of Definition for 'Crypto Asset Securities'
The SEC warned about crypto investment scams in a post on X. What caught attention was the agency's use of the term 'crypto asset securities.' The SEC linked the post to an investor blog from May 2024 that listed five ways scammers can defraud investors using 'crypto asset securities.'
Criticism from Ripple
Ripple Chief Legal Officer Stuart Alderoty previously criticized the SEC for using the term without a legal basis. In the FTX bankruptcy document, the SEC used the term 'crypto asset securities,' on which Alderoty commented, 'it's a fabricated term with no legal basis.' He also argued that the SEC is trying to mislead judges by using the term in its filings.
Legal Battles Involving the SEC
The SEC website only defines crypto assets but doesn't mention what constitutes a 'crypto asset security.' The Financial Industry Regulatory Authority (FINRA) also doesn't provide a definition. The question of what constitutes a security for the SEC remains a legal debate. For instance, in its recent legal tussle with eToro, the SEC indicated that Bitcoin, Bitcoin Cash, and Ethereum are not securities but left questions surrounding other assets.
Debates concerning the legal status of 'crypto asset securities' continue, with experts divided on how regulators should classify them.
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