19 Tokens That Have Been Flagged as Securities by the SEC
by Christian Viehof on Jun 16, 2023 8:30:00 AM
The recent designation of 19 tokens as securities, as outlined in lawsuits filed by the U.S. Securities and Exchange Commission (SEC) against prominent cryptocurrency exchanges Binance and Coinbase Global Inc., sent shockwaves through the cryptocurrency market. The implications of this classification were so potentially damaging that it triggered a sharp selloff, leading to a significant decline in their combined market value. The repercussions of this regulatory action extended beyond market losses. Robinhood Markets Inc., a popular cryptocurrency trading platform, responded by removing three of the flagged coins from its trading options. Similarly, eToro, a renowned trading platform, took a preventive measure by halting its U.S. clients from opening positions in some of these designated cryptocurrencies. The swift actions taken by these platforms demonstrate the immediate impact and concern surrounding the regulatory designation of cryptocurrencies as securities. All 19 affected tokens were classified using the International Token Classification framework (ITC), which can be accessed here.
Authors: Christian Viehof, Valentin Kalinov
Binance Coin ($BNB)
Binance Coin has multiple use cases within the Binance ecosystem. Firstly, it serves as a utility token for paying transaction fees on the Binance exchange, offering discounts to users who choose to utilize BNB. Secondly, BNB is used to participate in token sales on the Binance Launchpad, providing users with access to early-stage cryptocurrency projects. Lastly, BNB can be staked in various Binance products like the Binance Smart Chain to earn passive income.
Cardano is a blockchain platform with a focus on providing a secure and scalable infrastructure for decentralized applications (dApps) and smart contracts. Its primary use case lies in enabling the development of robust and transparent financial systems, particularly in areas with limited banking infrastructure. Cardano’s emphasis on rigorous research and peer-reviewed protocols ensures the platform’s reliability and sustainability, offering opportunities for innovative applications in various industries.
Solana is a blockchain that aims to provide fast and scalable infrastructure for dApps and crypto projects. It utilizes a unique combination of innovative technologies, such as a high-performance consensus algorithm and a scalable network architecture, to achieve high throughput and low latency. Solana’s fast transaction processing and low fees make it well-suited for applications in areas like decentralized finance (DeFi), decentralized exchanges, gaming, and other high-demand use cases.
Polygon is a Layer 2 scaling solution for Ethereum, designed to address its scalability issues. Its primary use case lies in providing a framework for building and deploying dApps that benefit from increased transaction speed and reduced fees. Polygon enables developers to create scalable and efficient blockchain solutions, making it suitable for various industries such as DeFi, non-fungible tokens (NFTs), and gaming.
Binance USD ($BUSD)
BinanceUSD, or BUSD, is a stablecoin operated by Paxos Trust Co., based in New York, under the branding of Binance. Its primary use case is to provide users with a stable and reliable digital asset that is pegged to the value of the US dollar. BUSD can be utilized for trading, as a store of value, and as a means of transferring funds within the Binance ecosystem and beyond.
Cosmos is a blockchain that aims to solve the issue of blockchain interoperability by enabling different blockchains to communicate and interact with each other. Its primary use case lies in facilitating the exchange of assets and data across multiple independent blockchains, creating an interconnected network of dApps. Cosmos offers a framework for building scalable and customizable blockchains, empowering developers to create innovative solutions and enabling seamless interoperability between various blockchain ecosystems.
Internet Computer ($ICP)
The Internet Computer is a blockchain that seeks to expand the capabilities of the traditional internet by providing a secure and decentralized environment for hosting applications. Its primary use case lies in enabling developers to build and deploy software directly on the Internet Computer network, eliminating the need for traditional web hosting services. By leveraging blockchain technology, the Internet Computer aims to create a more open and censorship-resistant internet infrastructure, with the potential to revolutionize the way applications are developed, deployed, and accessed online.
Filecoin is a decentralized storage network that enables users to store and retrieve data on a global scale. Its primary use case lies in providing a secure and efficient marketplace for decentralized file storage and retrieval. Filecoin utilizes blockchain technology and incentivizes participants to contribute their storage resources, creating a decentralized network of storage providers and users, offering a reliable and cost-effective solution for storing and accessing data.
Near is a blockchain designed for building and deploying dApps. Its primary use case lies in providing developers with a scalable and developer-friendly environment for creating blockchain-based applications. Near’s key features include high transaction throughput, low fees, and an intuitive development experience, making it suitable for a wide range of applications, from DeFi to gaming and NFT marketplaces.
Algorand is a blockchain that focuses on scalability, security, and decentralization. Its primary use case lies in providing a high-performance infrastructure for the development of dApps and the creation of digital assets. Algorand utilizes a pure proof-of-stake consensus mechanism, enabling fast and secure transactions while maintaining decentralization and ensuring participation from a wide range of network participants.
The Sandbox is a virtual world gaming platform that allows users to create, play, and monetize their own virtual experiences and games. Its primary use case lies in providing a user-friendly environment for building, sharing, and trading user-generated content within a decentralized virtual metaverse. The Sandbox leverages blockchain technology and NFTs to enable ownership and scarcity of in-game assets, fostering a vibrant ecosystem for creators and players alike.
MANA is the native cryptocurrency of the Decentraland virtual reality platform. It is used for purchasing and trading virtual land, as well as for buying and selling virtual goods and services within the Decentraland metaverse. MANA holders have governance rights and can participate in the decision-making process for platform development and improvements.
Axie Infinity ($AXS)
Axie Infinity is a blockchain-based game that combines elements of Pokémon and collectible card games. Players can breed, battle, and trade digital creatures called Axies. Its primary use case lies in providing a play-to-earn model, where players can earn cryptocurrency (AXS and SLP) by participating in battles, completing quests, and breeding Axies, creating opportunities for players to generate real-world income through the game.
Flow is a blockchain platform designed for building decentralized applications and digital assets. Its primary use case lies in providing a developer-friendly environment for creating and deploying blockchain-based applications and smart contracts. Flow aims to address scalability issues by utilizing a unique architecture that separates computation and consensus, enabling high throughput and efficient execution of decentralized applications.
The Chiliz token serves multiple use cases within the Chiliz ecosystem. Firstly, it is used to purchase Fan Tokens, which grant fans access to exclusive content and voting rights in club-related decisions. Secondly, CHZ is used for trading and liquidity purposes on various cryptocurrency exchanges. Lastly, CHZ can be staked to earn rewards and participate in token-based events and promotions within the Chiliz platform, creating additional incentives for token holders.
The NEXO token is primarily used within the Nexo platform, which provides crypto lending and borrowing services. Its primary use case lies in granting token holders benefits and privileges, such as higher interest rates on savings and lower borrowing rates on loans. Additionally, NEXO tokens can be staked to earn dividends from the platform’s profits, providing passive income opportunities for token holders.
Dash is a cryptocurrency that was created as a fork of Bitcoin in 2014. It aims to improve upon the shortcomings of Bitcoin by offering faster transaction confirmation times and enhanced privacy features. Dash, which stands for “Digital Cash,” emphasizes usability and accessibility as a means of digital payment, allowing users to send and receive funds quickly and securely. It also employs a unique governance system where stakeholders can participate in decision-making processes regarding the development and direction of the Dash network.
COTI, the cryptocurrency and platform, offers various use cases within the digital payments and finance sector. Firstly, COTI facilitates fast and low-cost transactions, making it suitable for everyday payments and remittances. Secondly, it provides a scalable infrastructure for building dApps and smart contracts, enabling developers to create innovative financial solutions. Lastly, COTI’s Trustchain protocol enhances security and enables the creation of trust-based applications, such as decentralized credit scoring and dispute resolution systems.
Voyager Token is the native cryptocurrency of the Voyager platform, a crypto asset brokerage platform. The token has several use cases within the Voyager ecosystem. Firstly, it can be used to pay for trading fees, providing users with discounted rates. Secondly, holding VGX tokens grants access to benefits like interest on holdings and priority access to new features and offerings. Lastly, VGX can be staked to earn additional rewards and participate in the Voyager loyalty program.
The International Token Standardization Association (ITSA) e.V.
The International Token Standardization Association (ITSA) e.V. is a not-for-profit association of German law that aims at promoting the development and implementation of comprehensive market standards for the identification, classification, and analysis of DLT- and blockchain-based cryptographic tokens. As an independent industry membership body, ITSA unites over 100 international associated founding members from various interest groups. In order to increase transparency and safety on global token markets, ITSA currently develops and implements the International Token Identification Number (ITIN) as a market standard for the identification of cryptographic tokens, the International Token Classification (ITC) as a standard framework for the classification of cryptographic tokens according to their inherent characteristics. ITSA then adds the identified and classified token to the world’s largest register for tokens in our Tokenbase.
- The International Token Identification Number (ITIN) is a 9-digit alphanumeric technical identifier for both fungible and non-fungible DLT-based tokens. Thanks to its underlying Uniform Token Locator (UTL), ITIN presents a unique and fork-resilient identification of tokens. The ITIN also allows for the connecting and matching of other media and data to the token, such as legal contracts or price data, and increases safety and operational transparency when handling these tokens.
- The International Token Classification (ITC) is a multi-dimensional, expandable framework for the classification of tokens. Current dimensions include technological, economic, legal, and regulatory dimensions with multiple sub-dimensions. By mid-2021, there will be at least two new dimensions added, including a tax dimension. So far, our classification framework has been applied to 99% of the token market according to market capitalization of classified tokens.
- ITSA’s Tokenbase currently holds data on over 4000 tokens. Tokenbase is a holistic database for the analysis of tokens and combines our identification and classification data with market and blockchain data from external providers. Third-party data of several partners is already integrated, and API access is also in development.
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Christian Viehof is an Executive Director at the International Token Standardization Association (ITSA) e.V., working to create the world’s largest token database including a classification framework and unique token identifiers and locators. He completed his Bachelor in Economics at the University of Bonn, the Hong Kong University and the London School of Economics and Political Science with a focus on Behavioral Economics and Finance. Currently pursuing his Master of Finance at the Frankfurt School of Finance and Management, you can contact him via firstname.lastname@example.org and connect with him on Linkedin, if you would like to further discuss ITSA e.V. or have any open questions.
Valentin Kalinov is an Executive Director at International Token Standardization Association (ITSA) e.V., working to create the world’s largest token database, including a classification framework and unique token identifiers and locators. He has over five years of experience working at BlockchainHub Berlin in content creation and token analysis, as a project manager at the Research Institute for Cryptoeconomics at the Vienna University of Economics and token analyst at Token Kitchen. You can contact Valentin via email@example.com and connect on Linkedin if you would like to further discuss ITSA e.V. or have any other open questions.