SEC May Redefine Crypto: Most Tokens Could Become Commodities

The U.S. Securities and Exchange Commission (SEC) may redefine the characteristics of cryptocurrencies, potentially classifying most tokens as commodities, according to U.S. regulatory expert Amy Lynch. This shift could place these assets outside the SEC's regulatory jurisdiction.

The SEC's ongoing lawsuit against Ripple Labs over the issuance of XRP tokens serves as a key indicator. Previously, the SEC accused Ripple of issuing unregistered securities. The outcome of this case is seen as a legal precedent that could classify most cryptocurrencies as SEC-regulated securities. The case has been progressing slowly, with the SEC appealing a previous court ruling in October last year. As regulatory attitudes shift, the focus is on whether the SEC will continue its appeal.

More broadly, the enforcement of securities laws may also be "severely restricted," partly due to the impact of the Department of Government Efficiency (DOGE). Lynch speculates that DOGE may scrutinize the SEC's internal operations more closely and attempt to streamline the agency.

"I think they will take the time to develop their own plan," Lynch said of the SEC, "and pending cases based on former employees' positions will ultimately be dismissed."

Lynch warns that uncertainty in the legislative process may lead to short-term selling pressure, but in the long run, it will solidify the foundation of value. Lynch points out that there have been previous instances where cryptocurrency prices have fallen due to changes in the legal framework.