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Why the Crypto World Flinches When the SEC Calls Coins Securities

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Crypto Woes Haven’t Impacted Wider Financial System: SEC's Peirce

Cryptocurrency traders have been put on notice that the US Securities and Exchange Commission considers a range of widely traded digital assets to be securities, a position that could impose regulatory requirements that many boosters say could be crippling. But figuring out what does or doesn’t make a coin a security is a complicated question.

Its chair, Gary Gensler, and his Trump-era predecessor, Jay Clayton, have said that many digital assets have the hallmarks of securities. Gensler spent the past year warning that the agency was planning to take a hard line in enforcing its rules over those tokens. Anxieties among crypto traders rose when the markets regulator took the unusual step in late July of identifying nine crypto assets that it considered to be securities as part of an insider trading case. Seven of them were traded on Coinbase, the US’s biggest crypto trading platform. Separately, Bloomberg News has reported that Coinbase is facing an investigation by the SEC into whether it listed assets for trading that should have been registered with the agency.