The SEC Claims Digital Assets Have No Inherent Value
In a recent court motion against Coinbase, the US Securities and Exchange Commission (SEC) has argued that digital assets do not possess any inherent value. The SEC asserts that crypto tokens cannot generate profits on their own and rely on an ecosystem to drive demand.
The SEC refers to the Howey test, which determines whether a transaction qualifies as an investment contract. According to the test, an investment contract involves investing money in a common enterprise and expecting profits solely from the efforts of others.
The SEC maintains that crypto assets lack inherent value unlike tangible assets sold in previous cases. The agency argues that the absence of inherent value classifies crypto assets as investment contracts under its jurisdiction.
Crypto Assets’ Value Tied to Underlying Investments
According to the SEC, although crypto assets may represent underlying value like an entry on a ledger, their actual worth is tied to the investment contract they signify. The tokens themselves have no intrinsic value and would be worthless without access to services or intellectual property.
Coinbase recently criticized the SEC’s enforcement-only approach for negatively impacting the US economy.
Hot Take: SEC’s Stance on Inherent Value May Impact Crypto Regulation
The US Securities and Exchange Commission’s argument that digital assets lack inherent value could have significant implications for the regulation of cryptocurrencies. By asserting that crypto assets are investment contracts due to their absence of intrinsic worth, the SEC is positioning itself to exert control over these assets within its jurisdiction. This stance may lead to increased scrutiny and regulation of cryptocurrency exchanges and projects in order to protect investors from potential risks. The outcome of this case will likely shape future regulatory decisions regarding digital assets in the United States.
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