According to a newly released report by the globally renowned financial auditing firm Bernstein, applying decades-long securities laws is the reason for classifying some crypto tokens as securities. The Bernstein report noted that the classification of cryptocurrencies as securities would only allow blockchain networks to be partially decentralized.
Are Crypto Tokens Securities Or Commodities?
According to the Bernstein report, categorizing crypto assets as securities or commodities is the primary objective of the lawsuits filed by the US Securities and Exchange Commission (SEC) against leading crypto exchanges like Binance and Coinbase. The financial accounts auditing giant noted that the question surrounding the regulatory status of these tokens is a critical factor in the ongoing legal battles between the regulator and exchanges.
However, the firm’s analysts, led by Gautam Chhugani, have different opinions. They argue that categorizing all tokens, except Bitcoin (BTC), as securities undermine the potential for blockchain networks to achieve true decentralization over time.
They further argued that this classification would make it impossible for tokens of these networks to have utility purposes. This viewpoint highlights the importance of considering the evolving nature of blockchain ecosystems and the utility that tokens can provide.
Last week, the US SEC announced that it is suing Binance, the world’s largest crypto trading platform, its CEO Changpeng Zhao (CZ), and its US arm, Binance.US. The regulator alleged that both parties had breached the US federal securities laws.
Interestingly, the SEC sued Binance’s rival, Coinbase, a day later on similar charges.
Using Blockchain To Reform The Finance Ecosystem
Furthermore, the Bernstein report cited progressive steps by countries like the United Kingdom, Hong Kong, Singapore, Europe, and the Middle East as examples of jurisdictions looking to leverage blockchain technology to transform their financial ecosystem. The report also noted that these jurisdictions attempt to outperform one another to build a global crypto and blockchain hub while the United States still grapples with regulatory uncertainty.
The report made recommendations regarding the central problem of whether countries should rely on outdated securities laws and acknowledge the fundamental purpose of blockchain networks. Meanwhile, it argued that blockchain would revolutionize the long-established financial and securities market systems.
Moreover, the report revealed that blockchain networks aim to bring about enhanced transparency, rapid settlement times, eliminating intermediaries, automation, cost reduction, global liquidity, and interoperability. Thus, adopting a more progressive regulatory framework is necessary to align with the transformative nature of blockchain technology.
According to Bernstein, this is akin to dividing the world into different jurisdictions, with countries having the opportunity to position themselves as attractive destinations for individuals and businesses associated with the crypto space.