Solana Foundation Addresses SEC Classification of Its Native Token Solana for the First Time on Twitter, as a guarantee.
“The Solana Foundation disagrees with the characterization of SOL as a security,” read the June 10 statement, noting that it welcomes the involvement of policymakers to achieve legal clarity in the digital asset space. Solana's native utility token was launched publicly in March 2020. SOL holders hold the token in order to validate transactions through its consensus mechanism. The token can also be used to earn rewards, pay transaction fees and enable users to participate in governance.
The SEC marked SOL tokens as securities in two lawsuits filed against cryptocurrency exchanges Binance and Coinbase on June 5 and June 6, respectively. Classification is based on several factors, including the expectation of profit from the efforts of others, and how the token w ill be used and marketed. “This classification is important because it subjects Solana and related activities to a different set of regulations and compliance requirements. [...] We are actively engaging with legal experts and communicating with the SEC to determine Understand and address their con cerns ," the foundation said in a letter to its community.
Along with SOL, SEC Adds Nine Other Cryptocurrencies to Securities Classification in Binance Lawsuit: BNB, Binance Dollar, Solana, Cardano, Polygon, Cosmos, Sandbox
, Decentraland , Axie Infinity And COTI. In its Coinbase lawsuit, the SEC names 13 cryptocurrencies, doubling down on newly classified tokens and adding 6: Chiliz (CHZ), Flow (FLOW), Internet Computer, Near, Voyager Token (VGX) and Nexo. According to the SEC, the term "securities" includes "investment contracts" as well as other instruments such as stocks, bonds and transferable shares. "A digital asset should be analyzed to determine whether it has the characteristics of any product that meet the s the definition of a 'security' under the federal securities laws," the regulator noted in its guidance on analyzing digital assets as investment contracts.
The Solana Foundation has conducted private token sales over the past few years, meaning it sold securities for institutional investors and venture capital firms. Its private sale was reportedly conducted under a Simple Agreement for Future Tokens (SAFT), a security offering used to ultimately transfer digital tokens from cryptocurrency developers to investors. In the case of a token sale via a SAFT, Solana also filed a private placement form with the SEC, and investors are locked in. During Solana’s ICO in March 2020, a public sale of SOL tokens was made, with 8 million tokens distributed to the public, representing 1.6% of its initial token supply. The token sale, at $0.22 each, raised $1.76 million for the Solana Foundation.
In an opinion piece about the recent developments, legal expert and Bloomberg contributor Matt Levin noted that the previous security offering of SOL should not make the token a security now. "The fact that these tokens are now publicly traded with less disclosure and investor protection than the SEC would like is unfortunate from the SEC's perspective. But it's not entirely Solana's fault, or rather , it was Solana's fault, but in a completely legal way," he said.
