- A U. S. federal court has recently defeated the SEC, stating that tokens traded on Kraken are indeed not securities.
- The decision follows similar legal conclusions to the Ripple case, showing that the SEC continues to struggle with the regulation of dig.
- The decision could pave the way for other cryptocurrency firms to dispute the SEC’s regulatory model, therefore,alter the future of digital asset regulations.
In a recent development, a U.S. federal court found that tokens sold on the Kraken platform are not security, contrary to the S.E.C. This decision has critical repercussions for the future of the S.E.C.’s jurisdiction and its right to categorize digital tokens as securities under U.S. law.The ruling comes amid several legal cases related to the regulator’s approach to digital assets.
The court’s ruling shows an increasing number of weaknesses in the S.E.C. argument that everything with the attributes of a token is a security. Essentially, the court has put the burden of proof on the house for the S.E.C. by demanding that the latter prove that each transaction on Kraken falls under the Howey Test. To evaluate whether a specific transaction can be considered an “investment contract” and, therefore, a security within the jurisdiction of the U.S., the Howey Test is applied.
Ripple Case’s results and its Impact on the Crypto Industry
This decision was made following another case with Ripple Labs, where Judge Analisa Torres dismissed XRP digital currency as a security whenever it was sold to the general public. This was evident in the Ripple case, where the SEC struggled to apply traditional securities laws in the digital asset market. The Kraken ruling shows that there are obstacles that the SEC needs to overcome when enforcing its regulations through legal proceedings.
Thus, the consequences of the Kraken ruling go beyond this case. It questions the SEC’s capability to manage crypto properties and assets and may impact other present and future disputes. According to legal analysts, this ruling might encourage other crypto-related businesses to fight against the SEC’s regulatory model for the sector, with the expectancy that other similar decisions for the industry shall help them.
Moving to the case’s discovery phase, the SEC now has to prove that Kraken has engaged in the sale of securities each time it facilitates a transaction involving digital assets. This development places the SEC’s regulatory plan at the apex of enabling scrutiny and can pressure the agency to change its tact.
The post Ripple’s Victory Echoes in Kraken Case: SEC’s Regulatory Grip Weakens appeared first on Crypto News Land.
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