SEC's Stance on Solana's Security Status Remains Unclear, Say Crypto Experts

Crypto experts suggest the SEC has not definitively ruled Solana a non-security despite recent court filings in the Binance litigation. The regulator's withdrawal from seeking a security determination for Solana has led to speculation about its overall stance on the token.

SEC's Withdrawal in Binance Case Doesn't Confirm Solana's Non-Security Status, Say Experts

Many crypto observers may be "overreading" the security regulator's most recent filing for its Binance litigation, which implies that Solana and other tokens may not be completely exempt from liability.

The United States securities regulator has not necessarily absolved Solana of its obligations as a security, despite its decision to withdraw its request for a court to determine the matter as part of its Binance lawsuit on July 30.

“There is no reason to think SEC has decided SOL is a non-security,” said Jake Chervinsky, chief legal officer at crypto-focused venture capital firm Variant Fund, in a July 30 X post.

Chervinsky's post pertains to the most recent response from the United States Securities and Exchange Commission, seeking to amend its complaint concerning "Third Party Crypto Asset Securities." The court is being informed that it is no longer seeking to ascertain whether the tokens enumerated in the lawsuit are securities.

Experts Agree: SEC's Withdrawal in Binance Case Doesn't Clear Solana's Security Status

Chervinsky did not provide further details regarding the nature of the "litigation tactic", according to Cointelegraph, However, he did emphasize that the SEC continues to refer to the same tokens as securities in other crypto exchange disputes, such as the one with Coinbase.

Miles Jennings, general counsel and head of decentralization at a16z Crypto, and Justin Slaughter, policy director at Paradigm, appeared to concur in distinct posts.

Slaughter contended that the SEC has not determined that Solana and other tokens are not securities and that many are "overreading this filing."

Jennings clarified that the SEC's time and effort in attempting to establish the Howey test in the Binance case were not justified due to the high threshold set by Judge Amy Berman Jackson.

The SEC's position appears more "inclined" to be supported by Judge Katherine Polk Failla in the Coinbase litigation. Consequently, it is worth submitting a request that is different from the one in the Binance lawsuit.

Jennings maintains that the SEC needs to present a compelling argument to establish a correlation between token issuers' managerial endeavors and sales of tokens on secondary markets.

“Obviously, I’m speculating about their political motive, but that speculation is informed by information I’m privy to about the SEC’s behavior behind closed doors,” he added.