Solana Foundation says SOL is not security

The Solana Foundation took to Twitter to address for the first time the US Securities and Exchange Commission’s classification of its native token, Solana (SOL), as a security.

“The Solana Foundation disagrees with the characterization of SOL as a security,” it said in a statement dated June 10, adding that it welcomes the engagement of policy makers to achieve legal clarity in the area of ​​digital assets.

Solana’s Native and Utility Tokens were publicly launched in March 2020. SOL holders stake tokens to validate transactions through their consensus mechanism. The token can also be used to earn rewards, pay transaction fees, and enable users to participate in governance.

The Solana Foundation disagrees with the characterization of SOL as a security. We welcome the continued engagement of policymakers as constructive partners on regulation to achieve legal clarity on these issues for the thousands of entrepreneurs in the US building …

– Solana Foundation (@SolanaFndn) June 10, 2023

The SEC has labeled the SOL token as a security in two separate lawsuits filed against crypto exchanges Binance and Coinbase on June 5 and June 6, respectively. The classification is based on a number of factors, including how the token is being used and marketed, along with the expected benefit to be derived from the efforts of others.

“This classification is significant because it subjects Solana and related activities to a different set of regulations and compliance requirements. (…) We are actively engaging with legal experts to understand and address their concerns. Have been communicating with the SEC for.” where did it go Foundation in a letter to its community.

Along with SOL, the SEC listed nine other cryptocurrencies for securities classification on Binance’s lawsuit: BNB (BNB), Binance USD (BUSD), Solana, Cardano (ADA), Polygon (MATIC), Cosmos (ATOM), The Sandbox ( SAND), Decenterland (MANA), Axi Infinity (AXS) and COTI (COTI). In its Coinbase suit, the SEC designated 13 cryptocurrencies, doubling down on newly classified tokens and adding six more: Chiliz (CHZ), Flow (Flow), Internet Computer (ICP), Near (NEAR), Voyager Token (VGX) and Nexo (Nexo).

According to the SEC, the term “security” includes “investment contracts” as well as other instruments such as stocks, bonds, and transferable shares. “A digital asset must be analyzed to determine whether it has any product characteristics that meet the definition of a “security” under the federal securities laws,” the regulator said. Advice To analyze digital assets as investment contracts.

The Solana Foundation held private token sales in previous years, meaning it sold securities to institutional investors and venture firms. its private sale was reportedly Exhibited Under a Simple Agreement for Future Tokens (SAFT), which is a security issued for the eventual transfer of digital tokens from crypto developers to investors. As part of the token sale via SAFT, Solana also filed private offering forms with the SEC, and was subject to investor lockup.

A public sale of SOL tokens was held during Solana’s initial coin offering (ICO) in March 2020, with 8 million tokens allocated to the public, or 1.6% of its initial token supply. This token sale raised $1.76 million for the Solana Foundation at $0.22 each.

In an opinion piece about recent developments, legal expert and Bloomberg contributor Matt Levine noted that the previous securities offering of SOL should no longer make the token a security. “The fact that those tokens are now publicly traded, with less disclosure and fewer investor protections than the SEC, is unfortunate, from the SEC’s perspective. But that’s not really Solana’s fault, or rather it Solana’s mistake, but a completely legal way,” he said.

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