SEC Clarifies That Not All Tokens Could Be Considered As Securities
SEC states that tokens distributed within a functioning network are not securities. This opinion was expressed by SEC Commissioner Hester PEIRCE, known for defending the possible existence of Bitcoin ETF last year. There was a transcript of the speech published on SEC’s official website, regarding the rules for tokens and their classification.
“When the tokens are not being sold as investment contracts, however, they are not securities at all. Tokens sold for use in a functioning network, rather than as investment contracts, fall outside the definition of securities,”
- this is an investment;
- there is an expectation of profit from investments;
- money is invested in a common enterprise;
- any profit depends on a third party or a promoter effort.
If all four criteria are passed, the asset is considered as security.
Image courtesy of Wall Street Journal