SEC Reverses Cardano and Solana As Securities in Latest Binance Update

The United States Securities and Exchange Commission (SEC) has revised its position on Solana (SOL) and Cardano (ADA), classifying them as securities in its ongoing investigation of Binance. The United States SEC filed an amendment concerning the ensuing complaint tagged “Cryptocurrency Asset Securities.”

The amendment requires the court’s immediate attention, requiring them to fasten up the ruling on the gravity and authenticity of the allegation against the affected tokens. The Howey Test, a legal framework used to establish whether a transaction qualifies as an “investment contract” and, thus, a security, is the basis for the classification, according to the SEC.

SEC had recently set aside ten cryptocurrency assets as securities. Amongst them includes Binance Coin (BNB), Sandbox (SAND), Decentraland (MANA), Cardano (ADA),  Axie Infinity (AXS), Polygon (MATIC), and Solana (SOL). This is happening amid the amid the implication of the bullish trend, which is expected to happen as a result of the SEC decisions to modify its classification method.

Binance Struggles Through Regulation, Express Dissatisfaction With the SEC’s Ruling 

A top analyst at Global Crypto Insights, James Carter, declared that the “the SEC’s classification of Cardano and Solana as securities affects their market prices and raises questions about the regulatory environment that other cryptocurrencies may face in the future.”

Binance is required to respond to the SEC’s concerns about Solana and Cardano’s listing and trading. Binance conveyed dissatisfaction with the SEC’s ruling in a statement and emphasized its dedication to collaborating with authorities to guarantee adherence.

The SEC’s ruling has generated discussion in legal and regulatory communities. Analysts believe the classification is required to safeguard investors and maintain the market’s integrity. The price of Solana had dropped by  -5.5%, followed by Cardano, which also fell by -4.5%  in the last 24 hours. The cryptocurrency community has started reacting to the development.

Industry Experts Accuse SEC’s Approach of Stifling Innovation 

A former SEC lawyer, John Davidson, stated that “classifying these cryptocurrencies as securities guarantees that these assets are held to the same standards as other financial assets.” Others, on the other hand, argue that the SEC’s uncompromising attitude stifles innovation in the rapidly developing blockchain industry.

Cryptocurrency legal expert Rachel Adams, believes that “the SEC’s broad classification of certain cryptocurrencies as securities risks stifling innovation and driving talent and investment away from the United States.”

The original complaint was lodged on the 5th of June, 2023, by the Security and Exchange Commission (SEC), targeting Binance alongside BAM Trading Services Inc., which is its United States affiliate—SEC had accused these entities of operating without the proper registration before operating as securities exchanges, clearing agencies, and broker-dealers.

The complaint statement says that Binance is operating under an illegal trading platform, which makes their operation illegal – and indicting investors from the United States. This has also exposed them to different risks, giving them a false narrative about their other investments’ regulatory guidelines and security.

CBOE Requests SEC to Allow  21Shares and VanEck to Launch Solana ETF

The available document says that the SEC duly informed the defendants of its intentions to amend its supposed complaint, as it concerns every “third party cryptocurrency asset securities,” as stipulated in the “Omnibus Opposition to Defendants’ Motion to Dismiss, Dkt. No. 172” by the SEC.

This approach is expected to eliminate the possibility of the court acquiring relevant allegations that are connected to the tokens in question. However, there hasn’t been any major market reaction at the moment. 

One of the top traders on the Bybit platform, by the name DeFi^2, commented on his X handle that there’s a reason the market faded and asked whether the affected coins are still classified as securities. DeFi^2 added that the short-term impact of this move includes the re-listing of Robinhood, while the long-term move includes the increased chances of a new approval of another cryptocurrency ETF. 

However, the Chicago Board Options Exchange (CBOE) has officially requested that the SEC allow  21Shares and VanEck assets managers to come up with spot Solana-propelled Exchange Traded Funds (ETF), a move that was proposed earlier this July. This move was backed up in 19b-4 filings, sent to the Securities and Exchanges Commission (SEC) requesting that the assets be listed.