US 'Project Crypto Launch' SEC 'Virtual Assets Are Not Securities' [Crypto Briefing]

[Financial News] Paul Atkins, Chairman of the US Securities and Exchange Commission (SEC) (photo), announced at the 'Project Crypto' launch ceremony held in Washington DC on the 31st of last month (local time) that "most virtual assets are not securities." This contrasts with the Biden administration's SEC, which had advanced the formula that '(except for Bitcoin) most virtual assets are securities' and proceeded with lawsuits against Ripple Labs and others.
The SEC imposed a fine of 2 billion dollars on Ripple Labs in 2020, claiming that they sold XRP (Ripple) without registering it as a security and filed a lawsuit. However, the New York District Court ruled in 2023 that "XRP is subject to securities law when sold to institutional investors, but not to general investors," effectively siding with Ripple Labs.
The SEC filed an appeal, passing the question of XRP's 'securities nature' to a higher court, but with the Trump administration's inauguration, it is highly likely to be withdrawn. Ethereum also raised analysis that it could be classified as a security according to the 'Howey Test' when it transitioned its network consensus algorithm from Proof of Work (PoW) to Proof of Stake (PoS) in September 2022. The Howey Test is used as a criterion to determine whether an investment asset can be seen as a security. The determination of securities involves △ money being invested △ the money being used in a common enterprise △ the expectation of profit from the investment △ the profit being generated by the efforts of others.
Chairman Atkins emphasized, "Most encrypted assets are not securities, but there is confusion in applying the 'Howey Test'," and reiterated, "Entrepreneurs using blockchain technology need clear rules to determine whether securities laws apply to their business and deserve such." He added, "I instructed committee staff to develop clear guidelines that market participants can use to determine whether encrypted assets are securities or the subject of an investment contract."
Chairman Atkins also expressed his stance on tokenized securities (STO). He pointed out, "Many companies are trying to tokenize common stocks, bonds, partnership shares, and other securities or tokenize third-party securities," but "due to regulatory issues in the US, it is happening overseas." He continued, "I heard from regulatory policymakers that requests for tokenization are pouring in from various companies, from famous Wall Street firms to unicorn tech companies in Silicon Valley," and "I requested SEC staff to cooperate with companies that want to distribute tokenized securities within the US."

elikim@fnnews.com Kim Mihee Reporter