Digital Assets: Bakkt Delists Solana (SOL), Polygon (MATIC), Cardano (ADA) Due to Lack of Regulatory Clarity in the US

Only a couple months after finalizing a $155M acquisition of Apex Crypto, an established trading infrastructure provider, the New York–headquartered crypto-assets platform Bakkt Holdings, Inc. (NYSE: BKKT) is delisting three major digital currencies: Solana (SOL), Polygon (MATIC), and Cardano (ADA).

Marc D’Annunzio, Bakkt General Counsel and Secretary, told Fortune that the firm was focused on taking more proactive measures until there is more clarity in the US on how to provide clients with a more extensive option of crypto tokens in a compliant manner.

This latest move has been revealed about a week following the US Securities and Exchange Commission’s (SEC) lawsuits that were announced against Binance and Coinbase, claiming that both crypto giants have been providing unregistered securities to clients.

As noted in the complaints, the SEC claimed for the first time that Solana’s SOL, Polygon’s MATIC, and Cardano’s ADA token are securities. The SEC’s updated definition has led to crypto-asset platforms to re-evaluate which digital tokens they are listing.

Robinhood’s Chief Legal Compliance Officer reportedly told Congress on the day of the Coinbase lawsuit that the Fintech trading app would be reviewing/assessing its product offerings. Notably, Robinhood has now delisted SOL, ADA, and MATIC just three days later.

Bakkt is also taking similar measures. The publicly listed firm—initially established by the Intercontinental Exchange (ICE), the operator of the New York Stock Exchange (NYSE), back in 2018—claims to have adopted a compliance-focused business strategy.

After trying out various business models, the firm is primarily focusing on an innovative service that assists other Fintechs, like Webull and, with offering cryptocurrency trading.

After providing clients with only Bitcoin (BTC) and Ethereum (ETH), Bakkt’s recently announced acquisition of Apex Crypto enabled it to further expand the virtual currencies available to its clients.

But now cautious of the heightened scrutiny from US regulators, Bakkt wisely started to significantly reduce the list of digital tokens that may come over from Apex.

As part of the comprehensive due diligence process, Bakkt had Apex Crypto delist seven major crypto tokens – which notably includes the failed Terra project as well as the privacy-focused coin Zcash (ZEC).

Following the acquisition in April of this year, Bakkt delisted two more tokens—Algorand’s ALGO and Decentraland’s MANA—a move taken the day after they were identified as securities in an SEC lawsuit filed against Bittrex.

In May, Bakkt decided it would be delisting 25 of its available 36 tokens, with a company representative explaining that the move was made as part of its “regular coin-listing review process” while attempting to follow the “most up-to-date regulatory guidance.”

The most recent delisting is indicative of the relatively hostile crypto environment in the United States, as companies attempt to deal with an unpredictable regulatory approach led by the US SEC.

It’s worth noting that Bakkt currently provides eight other major virtual currencies – which includes Dogecoin (DOGE), Litecoin (LTC), USDC, Shiba Inu, as well as Bitcoin and Ethereum.

In statements shared with Fortune, Gavin Michael, CEO at Bakkt, said:

“It’s fine to tell me where I can’t stand. But you have to tell me how to operate.”

The question of whether digital currencies may be regulated as securities or commodities is now vital to the sector in the United States, with the SEC going after service providers on if and how companies may register with the regulator.

In the SEC’s wide range of enforcement actions, the regulator has gone after service providers for selling crypto tokens that the agency considers to be unregistered securities, with SEC Chairman Gary Gensler claiming that most of the virtual currencies, with the exception of Bitcoin, do qualify as securities. Digital asset companies, meanwhile, state that there is no clear or practical way to register securities or platforms with the agency.

As noted by industry participants, each time that the SEC begins to describe and label a new crypto token as a security as part of a lawsuit, it creates a domino effect throughout the US crypto industry—a practice referred to by industry professionals as “regulation by enforcement.”

Michael added that one of the main reasons that Bakkt delisted ALGO and MANA after the Bittrex lawsuit is that liquidity providers had made the decision to end support for the two digital tokens. This meant that Bakkt would not be able to provide a fairly competitive depth of market.

Even with the considerable threat of potential SEC enforcement actions, Bakkt Chief Product Officer Dan O’Prey explained that a committee actually considers several key factors as part of a routine process when determining if they should continue listing digital tokens.

Some possible considerations may include if the token is a privacy coin, or if it is used for money laundering or other illicit activities, and if there have been hacks or other damaging security problems.

As part of its ongoing business model, Bakkt now intends to further expand its digital asset custody offerings to include other virtual currencies, besides just Bitcoin and Ethereum.

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