SEC Notches Win in Cryptocurrency Registration Battle

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Scoring a victory for the Securities and Exchange Commission in its efforts to qualify digital tokens as securities, a New Hampshire federal court ruled this week that tokens sold by LBRY Inc., known as LBC, are securities and subject to U.S. securities laws. The case, like others in the crypto space, centers on the legal controversy over when a utility token that is marketed as a product that can appreciate in value with the continued success of the issuer, but does not appear to provide any security interest in or right to share in future profits or participate in future governance of the issuer, can nonetheless be deemed a security. The court’s holding, premised upon the notion that a token can be deemed to be a security where a purchaser’s objective could be to profit from resale or otherwise based on the token’s potential appreciation in value, may have far-reaching effects on the rapidly expanding cryptocurrency industry if it is adopted by other cases, subjecting certain digital currencies to existing securities regulation.

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