- The SEC has been aggressively applying securities laws against crypto firms, categorizing over 60 crypto assets as securities based on the Howey Test. This has caused issues, as seen in the convoluted XRP ruling.
- A new bill introduced in New Jersey aims to provide more clarity by classifying cryptos sold directly to institutional investors as securities subject to state laws.
- With the SEC taking an aggressive stance, industry leaders are pushing for legislative action to provide more tailored crypto regulations. The New Jersey bill marks an early effort to add clarity on which digital assets are securities.
In recent months, the SEC has aggressively applied securities laws against crypto firms. A new bill introduced in New Jersey aims to provide more clarity around which digital assets should be considered securities.
The SEC’s Evolving Stance on Crypto Assets as Securities
The SEC has categorized over 60 crypto assets as securities based on its interpretation of the Howey Test. The test determines if transactions qualify as investment contracts subject to securities laws.
Issues came to a head when a court gave a convoluted ruling on Ripple‘s XRP. It said XRP sales to institutions could be securities, but not programmatic distributions.
Major industry players argue the SEC should introduce tailored regulations for crypto instead of shoehorning digital assets into outdated securities laws.
New Jersey Bill Classifies Some Crypto Assets as Securities
A new bill in New Jersey’s General Assembly classifies cryptos sold directly to institutional investors as securities.
It defines institutions as banks, hedge funds, endowments, and other qualified buyers. Virtual currencies sold to them would face state securities laws.
The bill’s limited scope may conflict with the SEC’s criteria for securities. But it aims to provide more clarity on which crypto assets qualify as securities in New Jersey.
The Way Forward
With the SEC taking an aggressive stance on crypto regulations, industry leaders are pushing for legislative action to provide more tailored rules. The New Jersey bill marks an early effort to add clarity around which digital assets should be considered securities. More legislative moves like this could help reconcile outdated securities laws with the new world of crypto finance.
