Recently, the US branch of the major cryptocurrency exchange, FTX, started analyzing tokens to determine whether or not they might be considered securities by the local authorities. Any token that doesn’t pass the check will then be removed from the platform to avoid problems with the regulators. The exchange’s CEO, Sam Bankman-Fried, explained as much in a blog post published yesterday, October 20th.
Bankman-Fried added that the US regulators have already conducted their analysis of some tokens, marking them as non-securities, such as Bitcoin and Ethereum. However, a number of coins and tokens have been flagged as securities, and as they were never registered, there is no way for them to be legally offered.
FTX to analyze all listed and future tokens
FTX US intends to hire a legal team of its own and start analyzing all digital assets that the regulators have not already approved in order to self-regulate. The team will use the Howey Test, which has been used for decades to identify whether assets are securities or not. So, any listed tokens that don’t pass the test will be removed. Also, moving forward, the tokens will be submitted to the test, and they will not be listed unless if they pass. Bankman-Fried that the only exception will be in the case of tokens that are securities and that are on a clear path for registration.
As for the tokens that do pass the test and are officially considered non-securities will be treated as commodities. Unless, of course, the US commission on securities says otherwise. The exchange will always respect the regulators’ opinion first.
FTX US and its CEO are under investigation
Interestingly, recent reports have revealed that Sam Bankman-Fried and the FTX US are now under investigation. They are being investigated by a Texas-based securities regulatory agency, and there is even a filing submitted against the FTX platform.
The filing claims that the FTX US and the exchange’s founder might be offering unregistered securities in the form of yield-borrowing accounts. Furthermore, the filing also added that FTX itself is not registered as a seller of payment tools or as a dealer of securities in the United States. As such, any securities that are being offered are illegal offerings.
The allegations are likely what caused FTX US to react the way it did, and now, the platform is trying to self-regulate and prove that it is willing to play by the rules rather than have to fight off the regulators in a similar way that Ripple has had to do after being taken to court.
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