Before the deadline, users were instructed to liquidate or transfer their holdings. After that time, the tokens will be automatically liquidated and turned into in-app currency.
Cardano (ADA), Polygon (MATIC), and Solana (SOL), three significant cryptocurrencies, will no longer be supported starting on June 27 according to the U.S.-based digital trading platform Robinhood.
Before the deadline, at which time the tokens will be automatically sold and converted to buying power on the app, the business recommended users to transfer or sell their holdings. Although Robinhood did not provide a specific explanation for the delisting, it did say that the decision was made during one of its routine examinations of the industry.
Due to their initial use as fundraising tools and the anticipation of investor rewards, the Securities and Exchange Commission (SEC) has classed some tokens as securities. Gary Gensler, the chairman of the Securities and Exchange Commission, explained that these tokens pass the Howey Test for securities and fit the criteria of an investment contract.
Related: Binance accused of operating unregistered securities exchange in SEC lawsuit
New Security Tokens
Polygon, Cardano, and Solana’s native tokens were recently labeled as securities by the SEC in its lawsuits against Coinbase and Binance.
The SEC claims that the following are securities: FIL, SAND, AXS, CHZ, FLOW, ICP, NEAR, VGX, DASH, and NEXO. Companies distributed these tokens to raise money, with investors expecting returns dependent on the success of the projects.
Three of the cryptocurrencies named in the SEC’s list have just been removed from the popular trading site Robinhood’s list. This judgment was made at the same time as the SEC’s historic lawsuits against significant participants in the cryptocurrency business. Robinhood hasn’t specifically mentioned in the media whether these enforcement actions had an impact on its delisting decisions.
The SEC’s actions and Robinhood’s delisting of tokens reflect the heightened regulatory scrutiny and difficulties the cryptocurrency market is currently facing. Both issuers and investors will be subject to particular legal and regulatory restrictions as a result of the classification of tokens as securities.
Related: SEC sues Coinbase for breaking US securities rules