• The US SEC is pursuing theories that will broaden the definition of what constitutes a safety.
• The SEC alleges wrapped tokens to be securities as a result of they’re a “receipt for safety”.
• The Regulator might leverage the receipt principle it promotes to focus on different crypto property like ETH.

John Deaton, the founding father of Crypto-Regulation.us, believes that the USA Securities and Change Fee (SEC) is pursuing theories that will broaden the definition of what constitutes a safety. He regards it as a harmful growth executed by the SEC with a well-planned and coordinated technique.

Mike is There’s a well-planned and coordinated technique being carried out. The SEC is pursuing novel harmful theories increasing the definition of what constitutes a safety. It began with calling tokens like #XRP, #LBC, #DRGN, and so forth. as “digital asset securities.” https://t.co/DvLpdz5hTN

— John E Deaton (@JohnEDeaton1) February 18, 2023

Deaton stated this whereas replying to feedback made by Mike Selig, a crypto and Web3 lawyer, over SEC’s current actions within the crypto trade. In response to Selig, the SEC appears to be shifting the goalpost in the course of the sport by altering the definition of digital asset classes.

Selig notably talked about SEC’s actions towards Do Kwon and TFL, the place the regulator alleges wrapped tokens to be securities as a result of they’re a “receipt for safety”. The fee extends the identical classification to stablecoins as a result of they’re “proper to subscribe to, or buy securities.”

Selig argued that the SEC might leverage the receipt principle it promotes to focus on different crypto property like ETH. The regulator can obtain this by performing towards the issuer of a corresponding wrapper and arguing that the wrapped token is a safety. That may qualify the wrapper as a receipt to safety.

He added that the SEC might exploit the second categorization involving stablecoins and assault nearly each crypto asset. Then, it will develop into a transfer focused at regulating all crypto property as financial worth as a result of they’re convertible to cash.

Deaton agrees with Selig’s place, noting that the SEC focuses on the underlying digital asset as safety. He thinks it is a blanket strategy to seize all gross sales, together with secondary market gross sales fully impartial of the promoter or issuer.

He identified that the SEC began by saying an “embodiment principle” which claimed that XRP embodied all of Ripple’s efforts and guarantees. In response to the SEC XRP represents the widespread enterprise between and all XRP holders. The regulator additionally claimed that XRP represented the expectation of earnings, qualifying it because the safety.

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