- 1 SEC faces backlash from the Dash community after claiming their payment system to be a security.
- 2 SEC uses Howey Test to determine securities.
The United States Securities and Exchange Commission seems to be constantly raiding the crypto battlefield, attacking various entities like Coinbase, Ripple, etc. Recently the SEC claimed that the Dash crypto network’s privacy payment system technology is a security, and they are fighting against the claim.
The SEC and Recent Attacks on Crypto Entities
The SEC believes that these six altcoins should be called securities, Dash a privacy-centric crypto payments coin, OMG Network (OMG), Monolith (TKN), Algorand (ALGO), NAGA (NGC), and IHT Real Estate Protocol (IHT).
On April 17, Bittrex, a crypto exchange, was also accused of selling unregistered securities. Even before this incident, they decided to wind up their operations in the U.S., referring to ambiguous regulatory standards. Dash was listed on this exchange, and it was probably caught in the crossfire.
On April 18, the Dash Community responded to SEC’s claim that they are a payment technology, not security. Moreover, Dash does not offer any profits; miners get paid for mining, masternode gets paid for maintaining nodes, and no one is paid anything for holding Dash. DAO governs it, and collective decisions are made for everything.
The Crypto Rating Council has also rated Dash similarly to BTC and LTC.
Its community further says they offer peer-to-peer digital cash, financial sovereignty, decentralized governance, and privacy, not crimes. They also pointed out certain flaws in the SEC arguments, as it said that the Dash Control Group was a fictitious entity and the Dash Core Group was nonexistent before 2017.
When writing, DASH traded at $59.77, gaining 0.61%, and its value against BTC hiked by 0.59% to 0.002BTC. The market cap hiked 0.62% to $671 Million, and its trading volume dropped by 15.23% to $90.14 Million in the last 24 hours.
Why Does SEC Believe Some Crypto Assets Are Securities?
The U.S. SEC uses the Howey test to determine whether a crypto asset should be called security. This test refers to the Supreme Court case determining if a transaction qualifies as an “investment contract.” If any transaction is believed to be an investment contract, it would be called a security. This would then require it to register under the Securities Act of 1933 and the Securities Exchange Act of 1934.
The country’s financial watchdog believes that an investment made in an entity, expecting considerable profit, is an “investment contract.” This is the parameter the SEC uses to call a token/coin security.
The SEC vs Ripple case would play a significant role in this scenario.
If the agency wins, XRP will fall under the definition of securities. If this happens, many similar tokes shall comply, and their issuers must line up for registrations. However, Ripple has claimed to challenge the verdict in the higher court.
Both parties have submitted the required testimonies and documents to the South District Court of New York. All the hearings are completed, and now they are waiting for the final result, expected in the second half of 2023.
Disclaimer
The views and opinions stated by the author, or any people named in this article, are for informational purposes only, and they do not establish financial, investment, or other advice. Investing in or trading crypto assets comes with a risk of financial loss.
Andrew is a blockchain developer who developed his interest in cryptocurrencies while pursuing his post-graduation major in blockchain development. He is a keen observer of details and shares his passion for writing, along with coding. His backend knowledge about blockchain helps him give a unique perspective to his writing skills, and a reliable craft at explaining the concepts such as blockchain programming, languages and token minting. He also frequently shares technical details and performance indicators of ICOs and IDOs.