The cryptocurrency market’s developments have always been controlled by regulations from governmental bodies, especially the United States Securities and Exchange Commission [SEC]. From Bitcoin [BTC] ETF rejections to maintaining control over cryptocurrency updates, the SEC has been on top of the cryptocurrency industry.
The latest opponent for the SEC is Kik Messenger, a popular messaging application. In the latest release given by Anthony Pompliano, the founder of Morgan Creek Digital Asset and a popular Bitcoin bull spoke about the privacy-first approach taken by Kik that has prompted the SEC to act on it. Pompliano stated:
“This pursuit of an alternative, innovative revenue model is what eventually brings us to the current legal battle. In 2017, Kik raised $98 million from a Token Distribution Event (TDE), which is a fancy phrase for an ICO. The ERC-20 token was created on the Ethereum blockchain (and since moved to a private blockchain), is called Kin, and was intended to serve as a common unit of value for transactions within the Kik platform.”
The SEC has taken it upon itself to investigate the Kin token sale and has claimed that Kik has violated US Securities law. The SEC has stated that the main issue comes during the discussion of whether Kin is a security or a token. Jay Clayton, the SEC Chair had even said that he believes every ICO is a security. In response, Ted Livingston, the CEO of Kik launched a rebuttal that said:
“On page 11 of the 1934 Securities Exchange Act, the very act that created the SEC, it explicitly states that the definition of a security “shall not include currency.”
The confusion arises because the SEC had previously pointed out that Bitcoin and Ethereum were not securities because they are sufficiently decentralized, a rule violated by Kik. At the same time, the SEC’s rules also suggest that if a commodity has a pre-existing network where the digital asset will be used cannot be deemed as a security. Building on the latter, Kik does have a pre-existing product/network which takes it out of the realm of a security.
Livingston has gone ahead and assured users of the platform as well as the entire cryptocurrency industry that the legal fight against the SEC is aimed to ensure clean and legitimate usage of crypto assets. In his words:
“Already, hundreds of thousands of people have exchanged Kin for goods and services. Kin is one cryptocurrency that truly is a currency.Crypto is set to usher in the next wave of widespread innovation. If we want that innovation to include the United States we need to start talking about what is happening behind the scenes. We are all in this together.
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