Category Archives: Howey Test

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Today’s SEC Blockchain Forum Could Open Up Old Debate of Crypto as Security

Today’s SEC Blockchain Forum Could Open Up Old Debate of Crypto as Security

The Securities and Exchange Commission (SEC) is breaking new, and hopefully positive, ground with its first Fin Tech Forum held on 31 June in Washington DC.

Issues on the agenda will clearly be related to cryptocurrency assets and DLT with key SEC officials being joined by various legal, financial and technical experts.

The key term is cryptocurrency “assets” as the Kin Foundation, defendcrypto.org launch is aiming to clarify the status of cryptocurrencies once and for all. The foundation is hoping that its recent lawsuit will eventually lead to a new version of the Howey test as a basis to determine when crypto tokens will be classified as securities. If successful, this will create a huge impact on the cat and mouse game of crypto regulation in the US perhaps even affecting the industry worldwide.

Circle, Kik, and others say a lack of clarity and leadership from the SEC about what is and are not a security have put the brakes on the industry moving forward. Kevin Werbach, a professor of legal studies and business ethics at the Wharton School of the University of Pennsylvania, has suggested that “It’s impossible to come up with an agenda for an event like this that represents everyone in the industry”. So, what direction the talks take at the SEC Blockchain Forum is uncertain, although Werback maintained:

“There will always be some perspectives that are insufficiently represented… I’m sure the SEC thought hard about whom to invite in order to get the best discussion of the issues they’re most concerned about.”

However, one analyst is not sure, maintaining that the panelists attending the SECs first Fintech Forum don’t include one broker-dealer or a qualified custodian commenting, “There’s no entity that would be subject to the regulations of the SEC at issue.”

Werback remains upbeat, arguing that anything which enlightens the regulators as the workings of the industry is likely to be a positive and productive step adding, “There is plenty of one-on-one contact between both sides, but a comprehensive public event like this provides an opportunity to evaluate the big picture.”

 

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Kin Foundation Takes on SEC with Project ‘Defendcrypto’ and Initial Funding of $5 Million

Kin Foundation Takes on SEC with Project ‘Defendcrypto’ and Initial Funding of  Million

Ted Livingston, CEO of Kik and founder of the Kin Foundation, has announced the launch of defendcrypto.org with a funding of USD 5 million to contend with the US Securities and Exchange Commission (SEC) over better regulations for cryptocurrency.

Kin foundation announces 'Defend crypto' to take on regulations in court

Livingston said:

“We all know [crypto] is the next mega-trend of technology and by always having to ask ourselves, ‘What will the SEC think?,’ we are giving ourselves a fundamental handicap to compete on the global stage.”

He further stated:

“Enough is enough, we need clarity, and the only way we’re going to get clarity is if we go to court, so let’s do that.”

Timeline of events:

About two years ago, the social media platform Kik raised a whopping USD 98 million for its kin token. However, Kik was swept by a wave of subpoenas that the SEC sent out to the crypto ventures last year. Kik was further notified that the SEC would issue an enforcement action against it for possible infringement of US security laws. In response to this notice, Kik and Kin made a compelling Well’s submission through which they publicly let SEC know that they would take it to the court.

The foundation is hoping that the lawsuit will eventually lead to a new version of the Howey test as a basis to determine when crypto tokens will be classified as securities. If successful, this will create a huge impact on the cat and mouse game of crypto regulation in the US perhaps even affecting the industry worldwide.

The website states that “Kin has already spent over USD 5 million and is committing another USD 5 million of BTC, ETH, and KIN in a Coinbase account to fight this out on behalf of the industry”. The defend crypto funds will ensure that things are done in a rightful manner and the users are also allowed to contribute for this cause. On the completion of the court procedure, the remaining resources will supposedly be allocated to a non-profit organization to make new innovations in the industry.

 

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