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What Cryptocurrencies Are Securities? A Comprehensive List
Cryptocurrency regulation has been a widely discussed issue for years now, with companies like Ripple Labs fighting lawsuits against the SEC in the US. Outside the US, the European Union looks to implement their MiCA regulatory framework in 2024, which will provide clear guidelines for investors to work with. In contrast, the US and the SEC particularly, have become quite hostile towards digital assets and cryptocurrency exchanges.
Case in point, in early June, the SEC filed against both Binance exchange and Coinbase exchange, two of the largest cryptocurrency exchanges on the market. In doing so, the SEC labelled an array of digital assets as securities, which prompted a sell-off by many US holders, and de-listing by some US platforms. Rather than actually creating any regulatory guidelines, they’re simply doing enforcement actions on existing companies who have never been provided any clarity by the SEC. But what cryptocurrencies did they call securities, and does that actually make them securities according to law?
Innocent Until Proven Guilty
Even though the SEC named a variety of digital assets as securities, it’s important to remember that their labeling doesn’t equate to legal classification. In order for any of the cryptocurrencies that the SEC called securities to be legally considered so, they must be proven to be a security in a court of law. This hasn’t happened for a single asset which the SEC named and, in fact, Ripple (XRP) recently won a court case against the SEC a the judge ruled the XRP token isn’t a security in most cases.
Until the SEC is able to prove that every asset they named as a security is in fact one, there is likely to be little headway in their lawsuits. It seems probable that these cases could go on for years, and it seems likely that most innovative crypto projects will just avoid setting anything up in the US and instead opt to work in more friendly jurisdictions. The SEC could end up letting another nation be the worldwide crypto hub by pursuing this witch hunt. That said, let’s discuss what they think is a security and what is not.
Not a Security: Bitcoin
The only digital asset which has been clearly defined as not being a security is Bitcoin (BTC). Just Bitcoin itself isn’t considered a security. Bitcoin Cash (BCH), Bitcoin SV (BSV), and Wrapped Bitcoin (WBTC) haven’t been defined in any way, despite ostensibly being the same concept. This is likely why Bitcoin didn’t experience anywhere close to the same price reaction as every other asset did when the SEC announced its suits.
Not a Security (Maybe): Ethereum
Ethereum (ETH) is in an extremely grey area. Gary Gensler, the SEC chairman, has been unwilling to say whether Ethereum is a security or not. Even during a meeting with congress, and being pressed to define it, he couldn’t. What’s odd is that he’s not willing to name Ethereum a security but is willing to label most assets in the Ethereum ecosystem as securities, something that doesn’t make too much sense. If the assets on Ethereum are securities, why isn’t Ethereum, or rather, if Ethereum isn’t a security, why are assets on Ethereum? There’s so little clarity.
Not a Security: Ripple (XRP)
In a surprising turn of events in the summer of 2023, Ripple won an important victory in a long-standing battle with the SEC.
A Southern District Judge ruled that the XRP token is not a security as far as retail investors are considered. There’s a bit of a caveat there because the judge did say that institutional sales of XRP or those used in a fundraiser could be considered a security. But that means any XRP traded on a public exchange is not a security. Major exchanges like Coinbase immediately re-listed the coin.
The case was seen as a bit of bellwether for the entire crypto industry as XRP is considered by critics to be one of the more centralized cryptos. In other words: If XRP isn’t a security than many of the tokens named by the SEC are likely not securities either.
The SEC was not pleased with the outcome and the case could still go to trail or be appealed but — for now — it seems like a major victory for the crypto market.
Coins and Tokens That SEC Has Called a Security
In filing their suits against Binance and Coinbase, the SEC specifically named 19 digital assets as securities, adding to their running total, and creating a total number of 69 cryptocurrencies that the SEC has labelled as a security.
The most notable assets that the SEC named as securities are Cardano (ADA), Solana (SOL), Polygon (MATIC), Cosmos (ATOM), NEAR Protocol (NEAR), Binance Coin (BNB), Filecoin (FIL), and Algorand (ALGO).
For the most part, each one of the above projects has released a statement indicating that they don’t believe they’ve violated any US securities laws, with many of them noting that they were created and launched outside the US.
XRP is arguably the most contentious example as the SEC and Ripple Labs have been battling since 2020 over XRP’s status as a security.
Below you can find the exhaustive list of digital assets that have been called securities by the SEC:
- Ripple (XRP)
- Telegram’s Gram (TON)
- LBRY Credits (LBC)
- OmiseGo (OMG)
- DASH (DASH)
- Algorand (ALGO)
- Naga (NGC)
- Monolith (TKN)
- IHT Real Estate (IHT)
- Power Ledger (POWR)
- Kromatica (KROM)
- DFX Finance (DFX)
- Amp (AMP)
- Rally (RLY)
- Rari Governance Token (RGT)
- DerivaDAO (DDX)
- XYO Network (XYO)
- Liechtenstein Cryptoasset Exchange (LCX)
- Kin (KIN)
- Salt Lending (SALT)
- Beaxy Token (BXY)
- DragonChain (DRGN)
- Tron (TRX)
- BitTorrent (BTT)
- Terra USD (UST)
- Luna (LUNA)
- Mirror Protocol (MIR)
- Mango (MNGO)
- Ducat (DUCAT)
- Locke (LOCKE)
- EthereumMax (EMAX)
- Hydro (HYDRO)
- BitConnect (BCC)
- Meta 1 Coin (META1)
- Filecoin (FIL)
- Binance Coin (BNB)
- Binance USD (BUSD)
- Solana (SOL)
- Cardano (ADA)
- Polygon (MATIC)
- Cosmos (ATOM)
- The Sandbox (SAND)
- Decentraland (MANA)
- Axie Infinity (AXS)
- COTI (COTI)
- Paragon (PRG)
- AirToken (AIR)
- Chiliz (CHZ)
- Flow (FLOW)
- Internet Computer (ICP)
- Near (NEAR)
- Voyager Token (VGX)
- Nexo (NEXO)
- Mirrored Apple Inc. (mAAPL)
- Mirrored Amazon.com, Inc. (mAMZN)
- Mirrored Alibaba Group Holding Limited (mBABA)
- Mirrored Alphabet Inc. (mGOOGL)
- Mirrored Microsoft Corporation (mMSFT)
- Mirrored Netflix, Inc. (mNFLX)
- Mirrored Tesla, Inc. (mTSLA)
- Mirrored Twitter Inc. (mTWTR)
- Mirrored iShares Gold Trust (mIAU)
- Mirrored Invesco QQQ Trust (mQQQ)
- Mirrored iShares Silver Trust (mSLV)
- Mirrored United States Oil Fund, LP (mUSO),
- Mirrored ProShares VIX Short-Term Futures ETF (mVIXY)
The CFTC and Commodities
In a funny twist, the CFTC had already opened a lawsuit against Binance in March, but rather than for selling securities, it’s for selling commodities and derivatives of them. The CFTC actually classifies all virtual currencies as commodities, which is much clearer than the SEC’s claims that one is a security while another is not. The CFTC defines Bitcoin and Ethereum as commodities for example.
Closing Thoughts: Security or Not, Crypto Persists
Though the markets reacted fairly negatively towards the announcement of the lawsuits, overall, they’ve held up fairly well.
It seems likely that those within the US were more likely to dump their holdings while those outside the US may have gotten a buying opportunity they weren’t expecting. It will be interesting to see what happens when the EU implements their regulatory framework, and how long these US legal cases will drag on.
