Leaders in the digital asset industry have strongly criticized the U.S. Securities and Exchange Commission (SEC) for how it classifies tokens. However, during the recent hearing for the LBRY lawsuit, the commission conceded that the token in question does not fall under the category of a security.
XRP Lawsuit Is The Key？
In the XRP Lawsuit, John Deaton, who serves as Amicus Curiae, has argued that the U.S. SEC's narrative labeling tokens as securities needs to come to an end. He believes that a token is simply a piece of software code and should be treated as such.
Deaton asserts that a token can be compared to any other commodity or asset that can be marketed, packaged, and sold as a security. He explains that the term “investment contract,” which is commonly used to define a security, is not about the underlying asset itself, but rather about the conditions that surround the offer and sale of the asset.
During the XRP lawsuit, John Deaton pointed to the Telegram case, where Judge Castel had explicitly stated that the GRAM token was not a security, but rather an “alphanumeric sequence.” Deaton also referenced the Ethereum speech by Hinman, in which it was stated that the digital asset is simply a code.
Furthermore, the XRP lawyer claimed that they had compelled the US SEC to acknowledge in their opposition brief that the XRP token, once it is no longer in use, is merely a computer code.
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