The US Securities Exchange Commission is currently looking at new ways to “control” the emerging cryptocurrency industry. However, it is not planning to redefine the meaning of a security as Jay Clayton the leader of the agency says.
Speaking to CNBC on Wednesday,
“We are not going to do any violence to the traditional definition of security that has worked for a long time.
“We’ve been doing this (managing securities) for a long time. There’s no need to change the definition,” he said.
According to a 1946 Supreme Court case that now serves as a modern precedent, as zycrypto.com wrote, securities represent an investment of money in a common enterprise, in which the investor expects profits primarily from other’s efforts.
The implementation of that definition in case of cryptocurrencies has been a debate with critics pointing to the ability of crypto coins to serve as a regular means of exchange.
Taking it to a step further, the rules guiding ICOs in the US will not be changed as Jay Clinton revealed in later comments,
“If you have an ICO or a stock, and you want to sell it in a private placement, follow the private placement rules. If you want to do an IPO with a token, come to see us (SEC).”
Ripple’s XRP came recently under fire as an “unregistered security” and is currently the subject of a court case.
Ryan Coffey who is trading the token and lost $551.89, now is demanding Ripple Labs a $300 million worth of XRP refund.
The result of this court case could determine if Ripple goes on existing as security and continue to affect other tokens that follow the same model.
This decision will largely affect the crypto ecosystem in the US and is one that newly appointed SEC Senior Advisor for Digital Assets and Innovation, Valerie A. Szczepanik will tackle first in her new position, according to ztcrypto.com.