You may be surprised to realize that while Bitcoin (BTC) is doing well to hold onto the $30k USD threshold, Bitcoin Cash (BCH) has actually more than doubled in price in the last month. While it hasn’t doubled in price, Litecoin (LTC) is also up about 30% over the past month. Bitcoin Satoshi Vision (BSV) is also doing very well, up about 60% in the last month. All the aforementioned blockchains run on the older proof-of-work consensus method, which means they have to be mined.
In order to understand why these assets are all up over the past month, we first have to look at the SEC’s lawsuits of both Binance and Coinbase, and what they’ve accused of being securities.
SEC Lawsuits and Legality
The SEC named a variety of digital assets as securities in their filings against both Coinbase and Binance crypto exchanges. It’s important to remember that their labeling and accusation that these assets are securities doesn’t equate to legal classification. In order for any of the digital assets that the SEC called securities to be legally considered as such, they must be proven to be a security in a court of law. This hasn’t happened for a single asset which the SEC mentioned in their filings, and still hasn’t been settled for Ripple (XRP), which is a court case that has been going on for years.
The SEC is going to have to prove that every asset they named as a security is in fact one. Until that happens there is likely to be little headway in their lawsuits. It seems probable that these cases could go on for years, just like the case against Ripple Labs. It also seems probable that many innovative crypto projects will just avoid setting anything up in the US and instead opt to work in more friendly jurisdictions such as Europe or London.
Those who work and live in the US are more affected by the SEC’s accusations than those outside of the jurisdiction, as those outside the US aren’t worried that their investments are going to be taken away or cause them to be fined if the SEC does prove it is a security. With that in mind, US investors are turning towards assets that weren’t labeled as securities by the SEC in their lawsuits.
Proof of Work Digital Assets Aren’t Securities?
The only digital asset which has been clearly defined as not being a security by the SEC is Bitcoin. No other asset other than Bitcoin has been defined as not a security. This includes Bitcoin Cash (BCH), Bitcoin SV (BSV), and Litecoin (LTC), the three assets already mentioned as increasing in price since the SEC filings. But if they haven’t been cleared of being securities, why are they going up in price so much?
EDX Markets, a new crypto exchange backed by some Wall Street giants like Charles Schwab, Citadel, and Fidelity, launched at the end of June with just four assets available: Bitcoin, Ethereum, Litecoin, and Bitcoin Cash. As far as EDX is concerned, all these assets are commodities and not securities.
Bitcoin (BTC) is a proof of work asset, you have to invest hardware, electricity, and time into earning it. Bitcoin Cash, Bitcoin SV, and Litecoin are also all proof of work digital assets that need to be mined. Because electricity, a commodity, is required to mine these assets, it then makes them commodities as well. While the SEC hasn’t explicitly stated that the aforementioned assets aren’t securities, EDX feels comfortable offering them to customers with the expectation of there being no legal repercussions in the long run.
Though their reasoning in choosing to buy into Bitcoin Cash, Bitcoin SV, and Litecoin may be logical, it is still wholly speculative, as the SEC certainly hasn’t fully cleared any of those assets of being a security. Bitcoin SV in particular, having not even been offered on EDX, is even more speculative, though it seems to have seen just about the same jump as the ones that were.
Investors who are buying into these assets are doing so with sound logic, but they may not get the payoff at the end of the day depending on the stance the SEC does end up taking with these assets. Assuming they do end up being classified as commodities, those who jumped on board early are likely to be pleased with their investment.