SEC Refers to Solana (SOL) and Polygon as Securities, As Industry Participants Seek Regulatory Clarity

tZERO pointed out that the SEC recently referred to Solana and Polygon as securities.

tZERO recently noted that it happens to be one of the only two licensees for a regulated special purpose broker-dealer digital asset security custodian and specializes in compliant digital securities.

The US Securities and Exchange Commission (SEC) appears to have confirmed its intentions to seriously take legal action against so-called altcoins or crypto tokens such as Solana (SOL) which the regulator referred to as unregistered securities.

This update from the SEC has been unveiled following recent chatter that the SEC could begin to take a more lenient approach towards regulating these types of  crypto-assets.

But in an updated lawsuit filed against leading crypto exchange Binance, the SEC seems to have stood firm in its stance that virtual currency exchanges such as Binance have been violating applicable US securities laws by enabling the trading of digital tokens like SOL.

The SEC’s updated complaint does not specifically categorize such digital tokens as “crypto asset securities,” which is actually a term that had come under considerable scrutiny.

However, the SEC has maintained its allegations, especially when it comes to Solana (SOL).

The SEC stated that assertions allegedly made by the Solana Foundation appeared to have motivated investors to think of SOL as a viable opportunity to make gains – which would essentially be from the foundation’s efforts to expand the Solana ecosystem. (Thus, being equal to an investment contract according to the seemingly outdated Howey Test.)

These assertions seem to be consistent with the SEC’s opinion/view that securities are considered to be investment contracts in which the gains come  from the efforts or labor of others (with the expectation of making a profit).

The SEC’s fresh focus on altcoins or any other cryptos other than Ethereum and Bitcoin comes after a period during which the regulatory authority suggested that it could start to claw back its case versus Binance, a decision or development that certain legal professionals considered a possible backtracking of its previously aggressive approach.

However, certain industry participants also viewed this as the SEC starting to  shift attention more towards large-cap alts like Cardano (ADA), Solana (SOL), as well as Polygon (MATIC).

But certain industry developments indicate that the SEC is still focused on its ongoing battle at a wider level, despite the agency actually not specifically identifying the tokens as securities.

It’s worthwhile to note that the suit against Binance, which had initially been filed back in June of last year, has alleged that the firm had actually been serving as a broker and exchange without obtaining proper authorization.

The SEC now intends to stop exchanges like Binance from moving forward with more such types of trading / business activities without obtaining proper registration and requires the disgorgement of gains it states were unlawfully earned.

However, as expected, the regulatory authority’s approach has received a lot of criticism, particularly since the SEC’s stance towards crypto regulation has become a major talking point in the upcoming US presidential election.

Current Vice President Kamala Harris as well as former President Donald Trump have both planned to resolve in their own ways the lack of regulatory clarity in the crypto sector.



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