Short Cuts: Are the Tokens You Have Invested in Playing be the SEC Rules?

Are the Tokens You Have Invested in Playing by the SEC Rules?

Throughout numerous consultations involving a blockchain token, smart contract, or cryptocurrency, there's a common denial of its classification as a security. This fundamental misunderstanding about what constitutes a security is crucial, yet often overlooked. The key point that needs to be emphasized, especially to the blockchain community and investors, is the nature of the token. If it represents a stake or interest in an activity or venture with the intent of profit, then it must comply with securities regulations. On the other hand, cryptocurrencies like Bitcoin, which have inherent utility and value without being tied to any specific activity or enterprise, are viewed differently by regulators. The distinction lies in whether the digital asset is backed by an underlying activity or business, which then subjects it to different regulatory scrutiny by bodies such as the SEC.