SEC Proposes Rule Letting Tokens Legally Stop Being Securities

The U.S. Securities and Exchange Commission has proposed a rule that would allow tokens to legally stop being treated as securities, according to Startup Fortune. The proposal concerns one of the most consequential regulatory questions facing crypto and Web3 projects in the United States: whether a digital token falls under federal securities laws.

The SEC oversees U.S. securities markets and enforces rules involving securities offerings, trading and disclosures. A token’s legal classification can affect the obligations of its issuer, platforms that support trading and market participants. Securities status has been a major source of uncertainty for crypto companies, developers and investors.

Under U.S. law, the treatment of a crypto asset as a security has often depended on the facts and circumstances surrounding its issuance, promotion and use. A rule creating a legal route for tokens to cease being securities could have broad implications for how digital-asset projects structure their operations and engage with U.S. markets.

Startup Fortune originally reported the SEC proposal. Further details on the proposed rule’s requirements, scope and implementation were not included in the available report title.