During a House Financial Services Committee hearing on Sept. 24, U.S. Securities and Exchange Commission (SEC) Commissioner Hester Peirce said the SEC now acknowledges that crypto tokens are not securities, despite the SEC suing numerous crypto companies over allegations that they were offering unregistered sales of securities.
"By using imprecise language, we've been able to sort of suggest that the token itself is a security, apart from that investment contract, which has implications for secondary sales, it has implications who can list it," Peirce said during the hearing. "And I think this is absolutely, we've fallen down on our duty as a regulator not to be precise, and so, talking into a footnote, that yes, we admit that now, actually, the token itself is not a security. That's something that we should have admitted long ago and then started wrestling with the difficult questions."
During the hearing, Congressman Tom Emmer grilled SEC Chair Gary Gensler for fabricating the term "crypto asset security" in order to exert the SEC's jurisdiction over the crypto industry.“You’ve made up the term crypto asset security," Emmer said. "This term is nowhere to be found in statute, you made it up [and] you never provided any interpretive guidance on how crypto asset security might be defined within the walls of your SEC. Your inconsistencies on this issue have set this country back. We could not have had a more historically destructive or lawless chairman of the SEC.”
In a lawsuit against Binance, the largest crypto exchange in the world by trading volume, the SEC claimed that ten tokens offered on the exchange are securities: SOL, ADA, MATIC, FIL, ATOM, SAND, MANA, ALGO, AXS and COTI. In its complaint, the SEC called those tokens "crypto asset securities."
The SEC has also accused Coinbase, the largest crypto exchange in the U.S., of facilitating the trading of crypto tokens that it said should have been registered as securities.