In two separate cases brought on June 5 and June 6 against cryptocurrency exchanges Binance and Coinbase, the SEC has classified the SOL token as a security.
In response to the Solana Foundation’s native token, Solana (SOL), being labeled as a security by the US Securities and Exchange Commission, the SOL token is now a utility token. The foundation disagreed with the characterization and stressed the significance of legal certainty in the context of digital assets in a statement on June 10.
The SOL token from Solana, which is both a native and utility token, was made available to the general public in March 2020. SOL token owners stake the token to verify transactions using the consensus algorithm used by the platform. The cryptocurrency can be used to participate in governance, pay transaction costs, and earn rewards.
In two separate cases brought by the SEC against prominent cryptocurrency exchanges Binance and Coinbase, SOL has been identified as a security. The classification is based on elements like the expectation of gains from other people’s labors and the use and marketing of the token.
![Solana Foundation: SOL Not a Security, Disagrees with SEC image 78](https://i0.wp.com/nosisnews.com/wp-content/uploads/2023/06/image-78.png?resize=649%2C414&ssl=1)
![Solana Foundation: SOL Not a Security, Disagrees with SEC image 78](https://i0.wp.com/nosisnews.com/wp-content/uploads/2023/06/image-78.png?resize=649%2C414&ssl=1)
The Solana Foundation welcomes interaction with decision-makers to develop precise rules and laws for digital assets. The foundation’s reply emphasizes the necessity of continuing conversations to guarantee a thorough knowledge of the nature and capabilities of tokens like SOL.
The SEC’s designation of SOL as a security highlights the regulatory difficulties and complications that the crypto industry faces. The results of these legal proceedings and upcoming legislative changes will have an impact on the whole market for digital assets as well as the classification and regulation of tokens in the United States.
Along with SOL, the SEC listed other nine cryptocurrencies to the securities’ classification on Binance’s lawsuit:
- BNB
- Binance USD
- Solana
- Cardano
- Polygon
- Cosmos
- The Sandbox
- Decentraland
- Axie Infinity and
- COTI (COTI)
Related: Binance accused of operating unregistered securities exchange in SEC lawsuit
In its Coinbase suit, the SEC named 13 cryptocurrencies, doubling down on the newly classified tokens and adding six more:
- Chiliz (CHZ)
- Flow (FLOW)
- Internet Computer
- Near
- Voyager Token (VGX) and
- Nexo
Related: SEC sues Coinbase for breaking US securities rules
According to the Securities and Exchange Commission (SEC) of the United States, a “security” can be any number of financial instruments, including stocks, bonds, investment contracts, and transferable shares. The SEC advises evaluating a digital asset to see if it satisfies the federal securities laws’ definition of a security in its guidance for examining digital assets as investment contracts.
In the past, the Solana Foundation sold assets to institutional investors and venture capital firms in private token sales. Simple agreements for future tokens (SAFT), a security issuance mechanism for transferring digital tokens from developers to investors, were purportedly used in these deals. For these token offerings, Solana submitted confidential offering documents to the SEC, and lockup periods applied to investors.
These specifics emphasize the legal and compliance steps that the Solana Foundation took into account when selling its tokens, which is indicative of the larger environment of securities laws controlling digital assets.