The Solana Foundation says that SOL is not security

The Solana Foundation took to Twitter to address for the first time the SEC’s designation of its native token, Solana (SOL), as a security.

“The Solana Foundation does not agree with the characterization of SOL as a security,” it said in a statement released on June 10, noting that it welcomes the participation of policymakers to bring legal clarity into the digital asset space.

Solana’s original token and utility were publicly launched in March 2020. SOL holders acquire the token in order to validate transactions through its consensus mechanism. The token can also be used to receive rewards, pay transaction fees, and enable users to participate in governance.

The SEC designated the SOL token as a security in two separate lawsuits filed on June 5 and June 6 against cryptocurrency exchanges Binance and Coinbase, respectively. The ranking is based on several factors, including the expectation of profits generated by the efforts of others, as well as how the tokens are used and marketed.

This designation is important because it subjects Solana and its associated activities to a different set of compatible regulations and requirements. […] We actively engage with legal experts and communicate with the SEC to understand and address their concerns.” advertiser The Foundation in a message to its community.

Besides SOL, the SEC has included nine other cryptocurrencies in the classification of securities in the Binance lawsuit: BNB (BNB), Binance USD (BUSD), Solana, Cardano (ADA), Polygon (MATIC), Cosmos ( ATOM), The Sandbox (SAND), Decentraland (MANA), Axie Infinity (AXS), and COTI (COTI). In its Coinbase lawsuit, the SEC named 13 cryptocurrencies, doubling the number of newly designated tokens and adding six more: Chiliz (CHZ), Flow (FLOW), Internet Computer (ICP), and Near (ICP). NEAR), Voyager Token (VGX), and Nexo (Nexo).

According to the Securities and Exchange Commission, the term “security” includes the “investment contract” as well as other instruments such as stocks, bonds, and convertible shares. “A digital asset must be analyzed to determine whether it has the characteristics of a product that meets the definition of ‘security’ under the federal securities laws,” the regulator states in a statement. guidance To analyze digital assets as investment contracts.

The Solana Foundation has been conducting private token sales in the past years, which means it has sold securities to institutional investors and venture firms. It was reportedly her own sales Procedure Under a Simple Agreement for Future Tokens (SAFT), a security issuance for the eventual transfer of digital tokens from crypto developers to investors. Within the token sales through SAFT, Solana also filed private offering models with the SEC, and investors were subject to the lockout.

A public sale of SOL tokens took place 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 on recent developments, legal expert and Bloomberg contributor Matt Levine male That SOL’s previous securities offerings shouldn’t make the token a security now. “The fact that these tokens are now publicly traded, with less disclosure and fewer safeguards for investors than the SEC would like, is unfortunate from the SEC’s standpoint. But that’s not exactly Solana’s fault, or rather Solana’s fault. But in a completely legal way.”

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