Poloniex, the cryptocurrency exchange owned by Circle, has geofenced nine tokens in the U.S. over fears they could be securities, meaning U.S. customers will be blocked from trading them. In a move that left the exchange “deeply frustrated”, Poloniex says it was forced to take such action due to the “increasingly limited environment in the US for crypto assets”. The affected tokens are:
Ardor (ARDR)
Bytecoin (BCN)
Decred (DCR)
GameCredits (GAME)
Gas (GAS)
Lisk (LSK)
Nxt (NXT)
Omni Layer (OMNI)
Augur (REP)
Decision Due to “Recent Guidance” from Authorities
In a series of tweets that announced the move, Poloniex gave the reasons for their decision, which they say are down to “recent guidance from US regulators” as to what tokens constitute securities and which don’t. The tokens in question have not actually been labeled securities, but Poloniex clearly feels that these are the most at-risk candidates given recent rulings by the Securities and Exchange Commission (SEC) and other information they have probably gathered in discussions with concerned parties. Poloniex is quick to state that they don’t actually believe the tokens are securities, but they “need to ensure we are in compliance with US law”, which is the situation most exchanges find themselves in.
Law Still Unclear
The law itself is still unclear on what token metrics constitute a security, with only a handful of ICOs having been prosecuted by the SEC and a guide for ICO operators and consumers as to what ICOs may or may not be considered securities.
SEC Director of Corporate Finance, William Hinman, said in June of 2018 that “in its present state” Ethereum would not be classed as a security, a statement that Chairman Jay Clayton addressed in March this year when he said that he agreed with Hinman’s reasoning on when a token can and cannot be considered a security. However, many people took this as official guidance that SEC did not consider Ethereum a security, which was not the case. This leaves the crypto industry still in a state of broad confusion, something that Poloniex in their tweet thread addressed quite robustly:
Crypto and digital asset innovation will continue, but without a new regulatory environment, people and businesses in the US may not be able to participate in these transformative technologies. We will continue to advocate for changes to US law and regulations.
