In the aftermath of recent lawsuits, we have seen many exchanges or investment companies in the US de-listing certain altcoins. Investors are also scrambling to rid themselves of these altcoins, leading to a rapid drop in prices. Furthermore, investors are not eager to buy at these seemingly low prices due to the uncertainty of the future. But what if this situation is darker than we initially thought?
Over the past 3-4 years, we have shared the altcoins labeled as securities by SEC, CFTC, and other US agencies in their investigations/lawsuits. We recently announced our list of such altcoins. More than 50 altcoins (majority of which are no longer existent) have entered into the securities classification.
So how was this classification made? Obviously, through the ‘Howey Test‘. As we have published a comprehensive review about this test, you can get the details from the related news (link). The real problem is that the number of altcoins classified as securities is not around 50. It’s much more if the SEC can convince the court to apply this test flexibly, perhaps 99.9% of altcoins can be labeled this way.
So let’s focus on the conclusion. If an altcoin is classified as a security (the issuance strategy primarily determines this), it cannot escape this classification later. This is because the first button is wrongly buttoned, and it cannot get out of this shirt unless it registers with the SEC and issues tokens (which hasn’t happened so far, and the future seems to be similar). So, we can focus on two things.
First, will the ‘Howey Test’ be applied flexibly? If it is made flexible, for example, if 3 out of 4 conditions are met (there is a precedent decision and SEC trusts itself for this reason), there is no escape. But if a decision comes out in the XRP case that it can’t be stretched, the crypto world can turn into a festival. We’ll live and see this. Until this happens, those who don’t want to get in trouble with the SEC will de-list the marked tokens.
So what about the second issue? We should examine that under a separate heading.
What did we say a moment ago? They will delist, there will be those who resist it, but in time we will see that all surrendered to the SEC, just like in the XRP Coin example. But even after it is confirmed to be a security, SEC will not be able to prevent the de-listed altcoins from being re-listed. This is the most important detail that everyone overlooks.
Is there a precedent decision on this? Yes, last year after LBRY lost the case, it achieved a victory to prevent secondary market sales from being blocked. So regardless of the decision, XRP Coin can be re-listed on all platforms it was de-listed from, including Coinbase. This solves its problem, which brings an environment where the fear of SEC is finally over.