There are at least hundreds of thousands (probably millions) of securities that have been properly registered in the USA: stocks, corporate bonds, private offerings, and many other kinds of financing structures. It’s not that hard since obviously all kinds of issuers can figure it out.
The crypto people want to pretend their tokens are something completely different, so they’re not willing to use the existing process and instead cry out for SEC to come up with something just for them.
How do you propose Bitcoin, or Ethereum, or any other decentralized & peer-to-peer asset be registered as a security? Coinbase and Kraken argue that there is no clear path toward registering these assets within the current framework.
For an example, some of the stringent per-transaction KYC/AML reporting requirements in traditional financial systems are often incompatible with today’s mechanisms of distributed ledgers.
These cases aren’t about Bitcoin and Ethereum but the dozens of other coins that these exchanges have listed.
Coinbase actively cooperated with token founders and venture capitalists like A16Z to list various newly issued tokens so that the creators and VCs could sell them to retail investors. This arrangement sure makes them look like securities.
Personally I’m fine if Coinbase and Kraken trade Bitcoin and Ethereum. Being restricted to those would be devastating for their profits though.
I checked, and the complaint[1] lists specific tokens, including ADA (Cardano), NEAR, SOL (Solana), ALGO (Algorand), MATIC (Polygon) and others. I have purchased some of these in the past from Kraken to evaluate the technology on my own terms. It would be a shame if the SEC forces consumers to use less reputable exchanges to access these tokens all in the name of "consumer protection."
There appears to be no clear path forward for crypto exchanges to legally list new crypto tokens to the public. I suspect that is the goal of the SEC and administration; to limit what is available to the public, rather than define clear policies that would enable regulated trading. The only token actually tested is XRP, which was deemed to not be a securities offering[2], and is notably absent from this new filing.
> "There appears to be no clear path forward for crypto exchanges to legally list new crypto tokens to the public."
That's American securities law. The exchanges can always sell these tokens to accredited investors, but that's not the business they want to be in, I guess.
Of the tokens you mention, Solana was a major component of Sam Bankman-Fried's fraud empire. You dismiss the consumer protection aspect, but clearly it would have been better for consumers if SBF and FTX/Alameda didn't have access to American retail investors through this token.
What I'm trying to say is, it's probably very hard right now to change securities laws in a direction that would make it easier for Americans to buy the kinds of tokens that SBF manipulated. That just seems like political reality.
Trying to prohibit citizens from something potentially risky is a poor approach to safety — we've seen it play out with alcohol, drugs, abstinence, etc. Another approach is creating new frameworks to engage and interact with these topics in a safe and secure manner. The SEC and US administration is taking the former approach.
> some of the stringent per-transaction KYC/AML reporting requirements in traditional financial systems are often incompatible with today’s mechanisms of distributed ledgers
The crypto people want to pretend their tokens are something completely different, so they’re not willing to use the existing process and instead cry out for SEC to come up with something just for them.