Bitcoin Forum

So why did SEC now accepts that everything apart from Bitcoin is a security? This makes me smile that they keep Bitcoin out of the hook but is it true that all other crypto projects can be considered a security?

What do you think? Oh, and here you go, before you ask where I read this news from

https://cryptomaton.medium.com/sec-everything-apart-from-bitcoin-is-a-security-ef371b1f0bd3

Securities are issued by organizations, almost all the altcoins are issued by known developers.

Bitcoin is decentralized, altcoins are not decentralized.

Satoshi Nakamoto is not known, it makes bitcoin to look like commodities like gold and silver. It makes bitcoin to look natural, although it is artificial.

See the altcoins getting more centralized, going from PoW to PoS, many of them now are using PoS including ether.

See stable coins which they mention more, they are centralized, they are all securities.

See DeFi too which are definitely securities too.

Is important to understand how bitcoin is a global tool, and not only a USA tool. And each country is in its right to see bitcoin as the way it works better for them. As a good example, we can see how El Salvador decide to make bitcoin a coin, and that works fine for them, but for other countries, Bitcoin is a Digital Asset or a Security... So, it depends on each country, we don't really have global laws for cryptos yet.

No one can recognize other cryptocurrencies as securities without first considering bitcoin being the ultimate one, as regards the SEC, we can not question them because they had never supported it right from time than sending attacks upon attack to counter the acceptabilities from various institutions, but now that bitcoin had gone beyond what they can control, manage or regulate, you should expect nothing more than this kind of attacks from them, but we all know that bitcoin remains our priority digital currency and no other.

Well, to be clear, the SEC said that most digital assets can be considered unregistered securities, not everything. The SEC has a set of guidelines called the Howey Test, which is used to determine whether something is a security. If a cryptocurrency meets the criteria outlined in the Howey Test, then it may be considered a security. Therefore, it is not accurate to say that all other crypto projects can be considered a security, but rather it depends on the specific characteristics of each project and how they fit within the legal definition of a security.

It's because _act_ is right. Bitcoin is decentralized and the developer of it Satoshi Nakamoto, no one knows where he is and that's just a pseudonym.
While the majority of the altcoins and also the stablecoins are issued by known people, registered people where the government can come and sue them anytime they want to. Bitcoin's nature, network, and security is maintained by its people and not just by some developers that do a thing on their developed altcoins.

The criteria of the Howey Test that SEC looking for and that consider Bitcoin if it is met to these criteria.

• There's an expectation of profits from the investment
• The investment of money is in a common enterprise
• Should be regulated by SEC

But the fact is Bitcoin is for everyone and SEC is only on U.S. law.
Yeah, it's true that many crypto projects may be considered securities under U.S. law, but not all.  
The determination of whether a cryptocurrency is a security or not depends on its various characteristics and how it functions.

Securities need some form of organization/issuing body in order to be recognized by the SEC. They need to have someone to pin down if what they issue turns out to be a fraud, or if the issuing body decides to scam the hell out of the people whom they released their securities to. I guess that's the main problem concerning bitcoin not being recognized as a security - it has no central figure governing its 'issuance' to the receiving parties.

It is obvious for bitcoin since bitcoin is not a financial asset, but a currency, it can not be categorized as a "security" but when it comes to altcoins the definition of a security is in a way that allows SEC to categorize some of them that resemble "a tradable financial asset" as a security. Although I'd argue that since altcoins are useless and don't represent any real value, even that definition is wrong. But SEC (and the likes of it) are using these categorizations for themselves so that the government has a clear way of how to deal with these things. For example to tax the hell out of them...

Not all cryptocurrencies can be considered securities.
In terms of the definition of securities, it is clear that securities are issued by the state with the aim of being able to keep investors in investing which shows one's ownership of assets. Bitcoin is not a financial asset even though Bitcoin can change hands through buying and selling transactions through the market.
Many references explain about securities so that we can draw conclusions.

Not really, I don't consider Litecoin/Doge as securities for example. But they left us out of it at least so that means Bitcoin services will have less "securities" interference from the SEC. However, the greater market that deals with all cryptos at once, including exchanges, will still get hammered by them and investor sentiment from those actions will as a result leak into Bitcoin's price (among other coins).

If SEC can not prove a point falls into Howey test, they can not call it as a security asset.

Howey Test Definition: What It Means and Implications for Cryptocurrency (https://www.investopedia.com/terms/h/howey-test.asp)

And being considered as security is not the end, that project can pay fee (it should be expensive cost) to be more matching with regulations. Regulations change with time and even if a project is fine today, they will likely have to adapt to future regulations too.

I do not know what could be the reasons but I will say that they are afraid that Bitcoin might ruin them. And that's why might not accept Bitcoin and also crypto.

Sec uses Howey test to determine what is securities or an investment contract. The below part is there basis on their recent action and I think the only reason why Bitcoin is off the radar is because it’s founder(Satoshi Nakomoto) is anonymous and there’s no one who will be addressed for the legal action. This makes the Bitcoin the one true decentralized network compared to existing Blockchain.

The Howey test has four parts to determine if something like bitcoin is an “investment contract.” A contract exists if each is true:

• There’s an investment of money
• in a common enterprise
• in which the investor expects a profit
• the profit is derived solely from the efforts of others.

Source: https://www.cnbc.com/2022/11/21/why-protections-for-crypto-investors-are-linked-to-orange-groves.html
https://www.cnbc.com/2023/02/20/how-the-sec-and-paxos-busd-fight-could-impact-the-stablecoin-market.html

SEC's recent statements indicate that they will be applying the Howey Test, which is a set of guidelines used to determine whether or not a financial instrument qualifies as a security, to all cryptocurrencies other than Bitcoin. While this decision may seem arbitrary, it is actually based on the fact that Bitcoin is decentralized and operates without the involvement of a central authority, making it less likely to qualify as a security.

SEC's determination of whether or not a particular cryptocurrency qualifies as a security is a complex and fact-specific analysis that takes into account a variety of factors, including the manner in which the cryptocurrency is marketed and sold to investors, the level of control that its developers or promoters have over its operation, and the extent to which investors rely on those developers or promoters for the success of the project.

If a cryptocurrency meets the definition of a security, it will be subject to the same regulations as any other security, including registration requirements and disclosure obligations. If a cryptocurrency is deemed not to be a security, it may still be subject to other forms of regulation, such as anti-money laundering and anti-terrorism financing laws.

The point is that bitcoin is a decentralized project and is not managed or owned by anyone. Even if the SEC calls bitcoin a security, I wonder how they will handle bitcoin. Bitcoin is decentralized, so even with regulation, the SEC or the government cannot stop criminals from using bitcoin.
 
What the SEC is doing is like they are scaring us, they are probing the market reaction to finding a way to step in and control it. They can suppress some crypto companies and some centralized projects, but I don't believe they can suppress bitcoin or the whole market.

I don't know if I should accept bitcoin as a security. I surely do for Proof-of-Stake cryptocurrencies, because they're the definition of securities. They're issued from companies (i.e., companies funding Ethereum foundation), they represent financial instruments that are traded, and the foundation is obliged to follow the stakeholders' opinion.

Doesn't sound like bitcoin to me.

I wonder if PoW altcoins (like Monero) are considered commodities or securities.

So far, only Bitcoin is not considered as commodity or security.

It is one of biggest reasons you should prioritize to pick Bitcoin for your portfolio. Ethereum, BNB and other altcoins have risk to be considered as commodity or security in future.

The whole cryptocurrency community are waiting for a final decision for XRP lawsuit case. It will open a gate for SEC to aim at more altcoin projects or it will reduce pressure and risk on altcoin projects if Ripple XRP succeeds to win the lawsuit or at least have a way to handle it with SEC, in peace.

I don't actually believe SEC will file that lawsuit if they see they fail it so a chance for Ripple is handling it with SEC, with money likely.

The risk against Ethereum forced Coinbase to delist Ethereum Classic months ago. I guess they thought SEC will aim at the initial project that raised fund and it is Ethereum Classic, not Ethereum.

But Bitcoin is taxed the same way as any other cryptocurrency in my place. There is no difference at all. When it comes to issuance, like ICOs and so on, there are differences in taxation compared to miners in Bitcoin. But that has different reasons.

Monero shouldn't be a security either then if Bitcoin isn't deemed a security? Or what exactly would be the difference between the two? Even if there are known people who created Monero, that doesn't matter because there are also people today maintaining Bitcoin. Monero wasn't dropped on anyone, but could be CPU mined during its early days, especially when you were familiar with remote access to AWS CPU instances. So nobody actually organized a public sale.

The SEC is trying everything to bend regulation such that they cover as many cryptocurrencies as possible.

You also said that Bitcoin is a currency, but besides El Salvador I am not aware of another country that embraces that definition. How do you get to the conclusion that it is a currency and, hence, cannot be categorized as a security? I might not be all up to date with the SEC's most recent statements.

If SEC define it as security, would that be correct? What is true is that Bitcoin is a decentralized currency and thus definitions otherwise are not important or accurate. Therefore, they are defined correctly as not security.
The question remains, will it be accepted as legal tender or not? This is something that will not happen in the medium and short term.
For altcoins, it is only a matter of time before most of them die.

I think you're confused.

Commodity = good
Security = bad

So far SEC has said that BTC can be considered a commodity, unlike many alts (especially PoS ones).

Even long term, I suspect, it won't happen. Developed countries have stable economies and currencies, they have no reason to accept bitcoin as legal tender, no different than they kill their own currency. Only countries that are experiencing economic difficulties and deadlocks will accept bitcoin as an opportunity.

I think the fact that SEC acknowledges ANY crypto as the security is already a great sign that adoption is going in the right direction. I think they will accept that bitcoin IS security sooner or later.

Dear, I don't care about what SEC thinks, One more thing I consider. Bitcoin as a digital Asset. Things are not complex here the point is how you take Bitcoin. One narrative is Bitcoin is just a currency willing to use as the global medium of exchange and some are willing to consider it a pure store of value. In my view, both narratives stand reasonable. SEC and PBOC and all these Financial authorities, whatever they can do they will to stop the global adoption of Bitcoin.

Things get a clear indication after the IMF policies for Bitcoin adoption in IMF-funded countries that Global Financial market authorities are afraid of Bitcoin's future preeminence.

I agree with what you said here.

You said it correctly again, but there are still other altcoins that are decentralized, but most of the altcoins are centralized.


Indeed, Nakamoto is not well known but he became popular because of Bitcoin. What is wrong with other governments of other countries is that they are trying to control bitcoin when it is impossible to happen. It's also true that bitcoin is just an artificial currency or fake money, but among all the fakes, I've seen only bitcoin that can be converted to real money around the world and increase the value of all currencies around the world as well.

Ethereum may have gone from POW to POS but that doesn't mean Ethereum can't go back to POW.

Bitcoin has some features that make it similar to securities and I'm sure many people use it like security. For example, it is often seen as an investment, it can be traded on third-party platforms (exchanges), people expect Bitcoin to rise in power, and there are Bitcoin funds that can manage one's holdings (although using them is completely optional). But, as _act_ pointed out, there are also notable distinctions that make Bitcoin different from securities. Overall, I think it's reasonable SEC doesn't treat Bitcoin as a security, and it's probably for the best because otherwise Bitcoin would have more oversight, be more regulated (at least, in the US).

Example of commodities are re gold, crude oil and any other things that are physical, naturally created and not created by organizations but known to be available on earth naturally that people see valuable. Gold is also an investment, people invest in it because they know that it's price can increase.

Gold and many other commodities are traded on exchanges too, but know that the future market for bitcoin is not actually bitcoin, bitcoin is bought on a spot market, but you can also buy and hold gold.

Because they can have control over any crypto if they choose to, apart from Bitcoin. They fear what they can't control. All the other crypto and exchanges are centralized sh*t. They will always favor the one they can control. No surprise there.
Whatever they do or say to bring down Bitcoin, remember 1 Bitcoin = 1 Bitcoin. These are the people who will be craving later on to legalize Bitcoin. No doubt about that.

I highly agree, altcoins that have an active developer have access on the code and they can do whatever they wanted and the government can pressure them to do what they wanted these developers to do.  One good example is creating new coins and implementing a swap, and those who failed to swap will have their unswapped coins useless because the developer decided to.  With Bitcoin, there may be hardforks but your Bitcoin is intact, and no need to move when hard fork happens.

Exactly. The very reason bitcoin couldn't be considered a security is due to the fact that it is decentralized, and therefore not released and maintained by any known organization unlike most Altcoins on the market right now, which as stated by some here are already becoming more and more centralized, with some even being built in the PoS network instead of the conventional PoW version. In any case, I think this is for the best, because at least bitcoin's not gonna be the center of their regulation efforts, or at least I think. It is basically a form of security without the label, much like Pluto failing to be classified as a planet due to failing on some criteria. But I digress, bitcoin could operate with or without the securities classification, arguably even better than if it were to be considered a security.

I think it makes sense that any altcoin is a security, they have board of directors, etc. Bitcoin is completely decentralized, and should not be treated as a security, because it is not.

They got it right in this time I think.

Thanks for explaining that in details. But the importance of BTC is always a bad thing in government's eye. They know the benefits, but the only thing that's stopping them to legalize it is the fact that they can't control it. Well, there's nothing to worry about it. Bitcoin is a proof of work based coin. So as long as people have trust in it and keep using it, whatever the government do, it will still thrive.

What could be the best security than having all the funds distributed over a network through millions of blocks? SEC should understand that bitcoin is having more security than the fiat and Altcoins itself. In fact there is no guarantee that whether a government issued bond would be worth anything in the future considering the way world is moving into dark hole of inflation and crisis.

What could stay valuable in such crisis? Something that has power of people, guessing that we have distributed ledger of bitcoin.

Could take little time to process all this but I think it is what it is.

Accepted as legal tender where?

It's already legal tender in El Salvador and in the Central African Republic.

I reckon the US will probably be one of the last places where it would be legal tender, as the US is the strongest fiat at the moment.

But let's remember that before the USD there was the British Pound, and the Spanish Real. Things change, and they change faster and faster. I can see that there won't be any next new fiat, but instead there would be a Bitcoin standard to replace USD dominance.

Of course the USA won't want that to happen so it won't make it a legal tender there.

SEC is greedy no matter what, they keep tailing everything in crypto as security. They never stop until they are in control of this crypto space that's why everyone are siding with XRP because they are the only one can pair up with SEC. XRP is the last stand to protect everyone in the crypto space and breakdown SEC greediness once in for all.

If you have some altcoin controlled by some group of people, then that's clearly a security, unless I'm missing something.

It's basically a company without all the regulations to protect the people that put their money into it.

Bitcoin is not a security though, it would be more comparable to gold in this scenario.

"Everyone"? ::)

I also think that their real aim is to find a way to control the whole market and us, and nothing else. They have ignored us for years, and now they have seen the potential of the market, so they will try to catch it. A few months ago, a few leaks showed that XRP has an advantage over the SEC, but there is no final verdict, and I really have a hard time believing that XRP will win the SEC. Because the SEC also knows that winning will be the best springboard to enter the crypto market and control it legally.

According to what I have read before on this matter, all comes to whether a cryptocurrency is "decentralized enough" or not.
So we could say that Ethereum and other "foundation" based assets could find some trouble in the future, in the case the SEC starts to create some precedents with the lawsuit against Paxos and other lawsuits against Ripple, ect.

Bitcoin cannot be touched and that is what matters. This may incentivize the ecosystem to move further away from centralization, which is good. 


Knowing how the government of certain countries may think of privacy, they may not think Monero is a security, but rather a threat to national security and global peace as a whole.  ;)

Whatever the SEC is doing now, it seems that they will put more pressure on others that they know are already known in
the cryptocurrency field.

    It's impossible because they don't know that they have no ability to control Bitcoin, the SEC seems desperate to control bitcoin. I can still believe that they can control other altcoins but not Bitcoin of course. But I think this is just a fud to destroy Bitcoin and others.

The Howey Test refers to the U.S. Supreme Court case for determining whether a transaction qualifies as an “investment contract.” If a transaction is found to be an investment contract, it's considered a security. Source : https://www.embroker.com/blog/what-is-the-howey-test-does-crypto-pass/

Now let's not forget that the US defined Bitcoin as a commodity and not as a Currency, so they are using their own protective definition to categorize Bitcoin as a security.  ::)

Not the same period though. Sure those were times when things were a bit different and they dominated that period, but that was because they took their money everywhere they went and that caused it to be bigger than everything else.

Right now we are in a global world, you might live on the opposite side of the world to me and we are talking here, internet made it like we are one big nation instead of so many different nations, we can chat and work and pay all at the same time in a minute. This means if USD is the biggest right now, during this period, then it's harder to drop that down. Bitcoin has a chance, just not a lot of chance to do so.