With the recent lawsuit on Binance US and Coinbase where many cryptocurrency assets were regarded as Securities by the Security And Exchange Commission (SEC), One may wonder if these assets have a good chance of winning the case.
For tokens, it might be a difficult case for them especially if they do not have a working product, while Blockchain Coins can be able to exclude themselves as Securities.
On what grounds will Blockchain-based Coins counter SEC allegations?
First, let us have a generalized and common view of Securities. The most common characteristic of any asset that is considered a security, is that the asset will have an investment feature where profits are made based on a general contribution of all investors. In other words, Securities depend on investment to thrive ( there are other characteristics of Securities but this is the most common)
Now the first question is, do Blockchain-based Cryptocurrency assets present an investment opportunity? Of course, the answer is, YES. The second question will then be, do they SOLELY depend on the investment of investors to thrive just as Securities does? Nah…..
I will explain.
The nature of Blockchain allows for decentralized applications and services to be built on it. For this service to be able to use the network, they need to run activities on the Blockchain and running activities on the Blockchain comes with transaction fees. If the investors who buy these coins with the hope of making profits from volatility are excluded, the Blockchain and its native assets will still thrive because of the services built on them.
For example, the Self-Sovereign Identity market through payment rails needs a token through which the three triangles ( issuer, verifier, and holder ) can benefit from the network the service is built on. People who intend to leverage real-world tokenized assets also need to have a coin of the Blockchain the service is built on. This is to aid them in paying transaction fees and not investments.
So, Blockchain-based tokens have more utility outside investment opportunities.
Coming to Binance Smart chain, Ethereum, Cardano, Ripple, etc. These Blockchains need to be around because Bitcoin as a Blockchain does not support building on its blockchain. With many innovations coming to the Crypto world, which has clearly shown that blockchain has more to offer outside investment, regulators will have to agree that these Blockchain-based tokens are not to be seen as securities. Most of them have been able to create an avenue for artists and fans to interact irrespective of geographical location through NFTs. Data security can be improved through the Blockchain and there needs to be a token for a successful usage of Blockchains.
Secondly, none of the Blockchains alleged as Securities will accept to be regarded as one, because it will destroy what they stand for. There is lots of stuff that can be done with their Blockchain and tokens. They will rather leave the particular country where they have been accused than succumb to being Securities.
This does not mean that they are not ready to comply with the regulatory framework. Almost all the accused coins and tokens are ready to comply but accepting to be securities will be difficult.
These are personal opinions as to why I believe Blockchain-based Coins will stay. Their stay means a stay for crypto. If you have a contrary opinion, bring it down to the comment box. Happy weekend Fellas, wishing everyone, a peaceful weekend.