US SEC "Buybacks and Burns Are Not Securities"...Will Large-Scale Institutional Fund Inflows Open Up?

▲ U.S. Securities and Exchange Commission (SEC), Bitcoin (BTC), Ethereum (ETH), XRP (XRP), Cardano (ADA), Cryptocurrency Regulation/AI Generated Image

The U.S. Securities and Exchange Commission (SEC) has released groundbreaking guidelines. It has largely excluded token burns, buybacks, and liquidity staking from regulatory oversight. The institutional floodgates for the next bull market have opened.

Dan Gambardello, host of the cryptocurrency YouTube channel Crypto Capital Venture, analyzed the SEC staff guidance in a video uploaded on September 26 (local time). Gambardello highlighted the ripple effect this regulatory easing will have on the cryptocurrency industry. He diagnosed it as a turning point that will clear away years of market uncertainty.

The core is an authoritative interpretation that development activities after network activation do not meet the securities requirements under the Howey Test. Gambardello stated, "Activities that improve, maintain, and enhance the security of a properly functioning network are not considered essential managerial efforts that make a token a securities offering." This opens the way for blockchain projects to invest funds and expand their ecosystems without the risk of penalties.

Own token buybacks and protocol-based burn policies, which are central to tokenomics, have also been exempted from securities controversy. Buyback disclosures for non-security tokens are not classified as promises of essential managerial efforts. Furthermore, criteria have been presented for liquidity staking receipt tokens to be recognized as digital tools or commodities. The guidance also includes that platforms providing a simple trading market will not be considered securities promoters.

Coupled with the revision of tokenized eligible investment guidelines by the staff of the U.S. Commodity Futures Trading Commission (CFTC), the pace of regulatory reform by authorities is accelerating. It is analyzed that capital inflow and technology adoption, surpassing those of 2020 and 2021, could occur simultaneously, aligning with the expansion phase of the macroeconomic business cycle. The virtual asset industry is expected to embark on a qualitative leap forward on a market structure where regulatory uncertainty has been resolved.

[Key Article Summary]

-SEC staff stated that continued development of an operational network, token buybacks, and burns do not constitute a securities offering under the Howey Test.

-Clear criteria have been established for classifying liquidity staking receipt tokens as digital tools and commodities.

-Coupled with the CFTC's revised tokenization guidelines, accelerated capital inflow and technology adoption, surpassing the 2021 bull market, are anticipated.

*Disclaimer: This article is for investment reference only, and we are not responsible for investment losses based on it. The content should be interpreted for informational purposes only.*