Confusion Grows as SEC Flip-Flops on ‘Crypto Asset Securities’

• The SEC faces backlash for inconsistent use of the term “crypto asset securities.”
• Legal shifts reveal SEC no longer classifies major tokens like SOL and ADA as securities.
• Confusion grows as the SEC uses contested terminology despite legal clarifications.

The U.S. Securities and Exchange Commission (SEC) has come under fire once again for its inconsistent terminology concerning crypto regulation. As highlighted by Eleanor Terrett, Fox Business reporter, the SEC issued an investor alert warning against crypto scams, specifically using the term “crypto asset securities.” 

However, the agency’s ongoing use of this phrase has drawn sharp criticism from industry figures, especially following its apparent shift in the legal classification of certain crypto tokens. The backlash highlights ongoing confusion over the SEC’s stance on crypto, particularly given recent legal proceedings that challenge the broad application of securities laws to crypto assets.

Fred Rispoli Criticizes SEC’s Investor Alert

Pro-XRP lawyer Fred Rispoli has been vocal in his criticism of the SEC’s recent investor alert. He claims that the term “crypto asset securities” is misleading and has even suggested that the alert itself could be seen as a “scam.” 

Read also: XRP Price Slips on Political Uncertainty and SEC Appeal Speculation

Rispoli’s comments come amid a broader controversy over the SEC’s inconsistent stance, as the agency has recently amended its legal complaints against Binance and other major exchanges. 

SEC Acknowledges Major Tokens Not Classified as Securities

Notably, the SEC’s amended complaint acknowledges that certain tokens such as Solana (SOL), Cardano (ADA), and Polygon (MATIC) are not classified as securities under its revised framework.

Read also: Lawyer Believes Judge Torres Will Address XRP Secondary Market Sales

This shift in the SEC’s stance stems from a U.S. district court ruling in a related case involving Kraken, where the SEC’s previous broad definitions of crypto as securities were legally challenged. 

Consequently, the SEC clarified that its term “crypto asset securities” does not refer to the tokens themselves but to the investment contracts and agreements tied to their sales. The agency has maintained that the term is a “shorthand reference” and not meant to misrepresent the nature of individual crypto assets.

However, the SEC’s continued use of this term has created significant confusion within the crypto community. In particular, the eToro settlement has attracted attention due to the SEC’s use of the term “crypto asset securities” multiple times in its order, issued on the same day the agency argued in federal court that it no longer applies the term to certain tokens. 

This inconsistency has drawn criticism from figures such as Jake Chervinsky, Chief Legal Officer at Variant, who expressed his frustration over the regulatory body’s shifting language and enforcement strategies.