You may or may not know "WHEN A COIN IS CONSIDERED A SECURITY BY THE SEC THEN....."

⚖️ 1. What does it mean for the SEC to consider a crypto coin as "security"?

The SEC uses a standard called the "Howey Test" to determine whether an asset is a security or not.

Accordingly, if a coin:

Has monetary investment,

In a project managed by others,

And expects to profit from the efforts of others,

→ Then it may be considered a security.

For example: If you buy a token just because you believe the team will increase the price → The SEC may consider that token a security.

🚨 2. If considered a security, what will happen to that crypto coin?

❌ a. Major exchanges (like Binance, Coinbase) may delist it

→ They fear being sued by the SEC for trading unlicensed securities.

🏛️ b. The project behind the token may be sued by the SEC

→ For example: The SEC previously sued Ripple (XRP), Solana, ADA, BNB, etc.

📉 c. The price may plummet due to investor fear of legal risks

→ FUD (fear, uncertainty, doubt) spreads causing users to panic sell.

🌍 d. Hinders development in the U.S. market

→ Investment funds and financial institutions may hesitate to engage, leading to decreased liquidity.

✅ 3. Does being considered a security by the SEC mean the coin is "dead"?

Not necessarily.

If the project is strong enough and has a global community, it can continue to thrive outside of the U.S.

For example: XRP, despite being sued, saw a strong recovery at times and partially won its case in 2023.

📌 What about BNB?

BNB was previously targeted by the SEC, claiming that the BNB ICO in 2017 was an "unregistered securities offering."

Consequences:

Binance US delisted BNB in mid-2023.

But BNB still thrives thanks to its community, users, and the BNB Chain ecosystem.