- John Deaton thinks Michael Saylor does not understand security laws.
- Previously, the crypto criticized the SEC’s claim that XRP was a security.
- A 2019 US regulation states that crypto is not a security if used for payments.
The argument about what constitutes a security contract remains a hot topic within the crypto industry. Recently, the well-known crypto lawyer, John Deaton, fired back at the chairman of MicroStrategy, Michael Saylor, due to a comment he made regarding security tokens.
Deaton specifically told Saylor that anyone who “truly understands securities laws knows that an investment contract is not the underlying asset or token.”
Previously, Deaton criticized the US Securities and Exchange Commission’s (SEC) claim that Ripple’s native blockchain token, XRP, constituted a security contract. The lawyer quoted a 2018 provision of the US corporate finance regulation to bolster his argument.
The rule says:
The digital asset itself is simply code. But the way it is sold as part of an investment to non-users by promoters to develop the enterprise can be, in that context, security.
Deaton said that since an asset can only be regarded as a security if promoters sold it as part of an investment to non-users, such a description does not match the case of Ripple’s token.
Furthermore, Deaton drew an inference from another provision of the law which stated that a digital asset is unlikely to satisfy the Howey Test if:
It can immediately be used to make payments in a wide variety of contexts or acts as a substitute for real (or fiat) currency.
Notably, the Howey test determines whether an asset qualifies as an investment contract, subjecting it to federal security laws. The SEC chairman previously argued that proof-of-stake blockchains, such as Ethereum(ETH), Cardano (ADA), and Solana (SOL), could pass the Howey test.
Post Views: 108
Source: https://coinedition.com/crypto-lawyer-thinks-michael-saylor-doesnt-understand-securities-laws/