SEC Claims ‘Crypto Asset Security’ Term Was Only Shorthand

The U.S. Securities and Exchange Commission (SEC) has stated that it used the term ‘crypto asset security’ as a linguistic shortcut and not as a specific identification of any particular token as a security.

The clarification came as a footnote within the agency’s proposed amended complaint against Binance about the latter’s sale of these assets and the broader set of contracts and understandings related to these sales.

The SEC pointed out that it apologizes for any inconvenience that may have been caused and that it shall not use the term in the future. It has attracted much criticism from the major players in the cryptocurrency industry, especially the SEC’s credibility.

The agency pointed to its position in the Telegram case but said its language might have confused. SEC’s decision has created more doubts regarding the SEC’s approach toward digital assets, with many people citing inconsistencies in previous statements.

SEC’s Shifting Crypto Terminology Sparks Backlash

The SEC’s effort to explain its stance further has attracted a lot of backlash from significant players in the crypto space. In its motion to dismiss, Coinbase’s Chief Legal Officer, Paul Grewal, noted that the SEC had once described XRP as a cryptocurrency in its complaint against Ripple Ltd.

This statement contrasts with the current position of the SEC, which stated that “crypto asset security” was not intended to classify each token as a security. Also, Ripple’s Chief Legal Officer Stuart Alderoty complained that the agency has been taking contradictory stances.

The SEC’s problem was to prove that some of these digital assets fall under the Howey test to determine that an investment contract is a security. Galaxy Digital’s CEO said that the SEC’s changing language erodes its authority in regulating the crypto market.

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