A member of the American Securities and Exchange Commission, Hester Peirce, on February 8, published a transcript of his speech. She stated that crypto-coins, which function as a unit of account on a separate platform, cannot be considered securities.
According to Hester Peirce, not all cryptocurrencies can be considered in terms of securities. Those coins that serve as an auxiliary tool on platforms (utilitarian tokens) are just official tools, they will not be regarded as money, securities or financial assets.
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Hester Pierce, SEC Commissioner and utilitarian tokens
One of the SEC representatives, Hester Peirce, made a clear distinction between utility and security tokens. The former, according to the information in the transcript of the speech, cannot be considered by the SEC, since they are not securities. But the latter, just in the competence of the Commission, since they are "really securities" and must comply with all the standards of financial regulation of the country.
"If a crypto-token is not sold as an investment contract, it is not a security (...) Tokens that are sold to operate the network and work on it, and not as investment contracts, cannot be considered in the definition of securities" – Hester Peirce.
Hester Pierce from the SEC about Howey Test
In addition, Commissioner Hester Peirce recalled famous Howey Test. According to information in the transcript, this test is used to confirm or deny the accession of the tokenToken
– is an accounting unit that is used to represent a digital balance in an asset.Details to the securities. The essence of the Howey Test: each transactionTransaction
– is a financial term that means a logically meaningful operation that can only be carried out completely. Details can be regarded as a security only in the case of the fact of investment, the presence of an enterprise, the expected profitability (which is potentially dependent on third-party efforts).
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If you rely on the above definition, utilitarian tokens are not securities. The argument of the Howey Test is often used by ICOICO
(Initial Coin Offerings) is an acronym, which means a primary currency offer. Details organizers, who are afraid of the requirements of regulators. SEC Commissioner said that utilitarian tokens do not fall into the securities section. Although the discussions about whether tokens can be considered as assets within the competence of the SEC are quite contradictory.
Editor: Yuliya Soroka