Cardano and Solana No Longer Classified as Securities in SEC’s Revised Binance Lawsuit

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The US Securities and Exchange Commission (SEC) has recently updated its legal complaint in the ongoing lawsuit against Binance, bringing considerable positive news for Solana (SOL) and Cardano (ADA).
This update involves a pivotal change regarding the classification of ten cryptocurrencies, which were previously deemed as securities by the SEC.
The revision could have significant implications for the market and regulatory landscape, according to various experts in the crypto industry.

The SEC’s decision to not classify Solana and Cardano as securities can have a profound impact on the crypto market, inviting renewed interest and possibly influencing regulatory policies.

SEC Updates its Complaint Against Binance

The SEC initially filed a lawsuit against Binance and its US affiliate, BAM Trading Services Inc., on June 5, 2023. The lawsuit alleged that these entities operated as unregistered national securities exchanges, broker-dealers, and clearing agencies, exposing investors to significant risks without adequate regulatory oversight.

Amendment to Crypto Asset Securities Classification

On July 30, the SEC filed an amendment modifying the classification of specific “Crypto Asset Securities.” This development removes the immediate need for the court to rule on the adequacy of the allegations involving these tokens. The SEC noted, “The amendment eliminates the necessity for the court to assess the sufficiency of these allegations at this juncture,” effectively delaying any immediate legal rulings on the matter.

Market Reaction and Expert Opinions

Despite the potential bullish sentiment surrounding this update, market responses have been muted. Solana and Cardano prices experienced declines of -5.5% and -4.5%, respectively, over the last 24 hours. The broader market sentiment remains subdued, influenced by other negative news, such as the US government’s potential sale of 29,800 BTC. Prominent crypto trader, DeFi^2 (@DefiSquared), remarked, “Market faded this move for some reason, but it actually seems like pretty significant news for the coins no longer being classified as securities? Short-term implications include a likely imminent Robinhood re-listing, and longer-term, improved chances of new ETF approvals.”

Future Regulatory Developments and ETF Approvals

In early July, the Chicago Board Options Exchange (Cboe) requested SEC approval for asset managers VanEck and 21Shares to launch a spot Solana-based exchange-traded fund (ETF). This formal request, detailed in separate 19b-4 filings, aims for listing approval as soon as regulatory conditions permit. SEC’s updated complaint could potentially smooth the pathway for such financial products, benefiting the broader market.

Conclusion

The SEC’s decision to reclassify certain cryptocurrencies, including Solana and Cardano, from securities status may reshape the regulatory and investment landscape in the crypto market. While immediate market reactions have been subdued, the long-term implications could be significant, potentially easing regulatory challenges and fostering new investment opportunities, such as the approval of ETFs. Investors and stakeholders should closely monitor ongoing regulatory updates to understand the future trajectory of these assets.

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