Cryptocurrencies occupy a fascinating and complex space in the financial world. Let’s delve into this topic:

SEC’s Perspective

• The U.S. Securities and Exchange Commission (SEC) considers most cryptocurrencies to be securities.
• However, there are exceptionsBitcoin and Ether are generally regarded as non-securities because of their decentralized nature.
• The Howey Test is often used to determine whether an asset qualifies as a security. It assesses factors like investment contracts, expectations of profits, and reliance on a third party.

Decentralization Matters

• The SEC’s primary criterion revolves around whether a crypto project is “sufficiently decentralized.” If it is, the associated cryptoasset is not considered a security.
• Essentially, if a blockchain project is truly decentralized, its token may escape the securities label.

Examples

Some assets that the SEC has explicitly named as securities include Cardano (ADA), Solana (SOL), Polygon (MATIC), Cosmos (ATOM), NEAR Protocol (NEAR), Binance Coin (BNB), Filecoin (FIL), and Algorand (ALGO).