The U.S. Securities and Exchange Commission says nearly all crypto assets are unregistered securities. However, experts suggest that this is different for the two cryptocurrencies.
US regulators realized that the crypto market is permanent!
cryptocoin.comAs you follow, the cryptocurrency regulation debate in the United States continues. These discussions brought together different minds on how to move forward with the adoption of crypto and Blockchain technology. Meanwhile, US regulators have undeniably understood that the crypto market is permanent. As a result, an entire ban on the cryptocurrency industry is out of the picture as other global jurisdictions move to regulate the industry for mainstream adoption.
Moreover, a recent study by Triple-A shows that global crypto ownership has exceeded 420 million. It also reveals that the North American continent has reached around 54 million users. Asia has the largest share, with around 260 million people using crypto for payments or holding it against inflation. With the numbers expected to increase exponentially in the coming years, institutional investors have started to double their investments in the crypto market, mostly Bitcoin and Ethereum. The entire cryptocurrency market cap is approximately $1.22 trillion. Bitcoin and Ethereum account for about 70 percent of this.
Howey Test for two cryptocurrencies: Bitcoin and Ethereum
The Howey test is used to determine whether certain transactions are eligible to be classified as investment contracts. This test was created by the Supreme Court. Under the Securities Act of 1933 and the Securities Exchange Act of 1934, transactions that qualify for classification as investment contracts are considered securities. Therefore, these assets are subject to certain disclosure and registration requirements. Under the Howey test, any transaction must meet four conditions to be a security. Among the stipulated conditions are:
- Having a money investment.
- The expectation of profit from the investment.
- An investor invests money in a joint venture.
- Any profit made by the efforts of an organizer or a third party.
Under these circumstances, the SEC accused Binance and Coinbase Global Inc of listing unregistered securities and operating illegal securities exchanges. Specifically, the United States SEC mentioned several crypto assets that are considered securities, including Solana (SOL), Cardano (ADA), BNB, and stablecoin BUSD. However, experts say that Bitcoin and Ethereum are not unregistered securities under the Howey test. According to experts, both cryptocurrencies are not decentralized enough to be securities.
Ethereum has moved from a Proof-of-Work (PoW) consensus mechanism to a Proof-of-Stake (PoS) consensus mechanism. After that, it recorded a high level of decentralization. Therefore, there is no single central body to control Ethereum and Bitcoin. In addition, experts say that the crypto market solves a unique market problem involving the opening of global markets through fast, secure and scalable transfer of value. For many years, value transfer has been accomplished through silo infrastructure, which has proven to be expensive for users and institutions themselves.
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