Why the Crypto World Flinches When the SEC Calls Coins Securities

The US Securities and Exchange Commission has put the financial world on notice: It considers a range of widely traded digital assets to be securities, a position that could impose steep regulatory requirements on digital-asset exchanges. Recently announced legal actions against some of the biggest names in crypto trading will put that proposition to the test. Figuring out what does or doesn’t make a coin a security is still a major point of contention.

In July 2022, as part of an insider-trading case, the SEC identified nine cryptoassets that it considered to be securities. On June 6, the agency sued Coinbase Global Inc., the biggest US crypto trading platform, over allegations that it illegally listing numerous tokens. In a separate case announced a day earlier, the SEC alleged that Binance Holdings Ltd. also listed unregistered securities. All told, as of June 6, the SEC under Chair Gary Gensler had signaled that it considers coins worth $120 billion to be unregistered securities. The SEC has said that its securities rules apply as well to crypto staking, which offers customers a return for letting their tokens be used to facilitate blockchain transactions.