The SEC's Uphill Battle: Cryptos as Securities

The Securities and Exchange Commission (SEC) may face challenges in proving that most digital assets are securities, according to securities lawyers. Binance and Coinbase, the world's two largest cryptocurrency exchanges, argue that cryptocurrencies do not meet the definition of securities because they do not provide owners with profit derived from the labor of others. The SEC will have to define "labor" and "others" and show that investors expected profits based on the issuers' public communications. Existing U.S. laws do not comfortably fit digital assets, and the SEC's interpretations may be seen as usurping the legislative role of Congress. The outcome of the SEC's cases against Binance and Coinbase could provide clarity on the regulation of cryptocurrencies, but legislation in this area is needed for comprehensive regulatory clarity.