One main issue is whether there is a person or group that sponsored the development, maintenance, and sale of the coin. The behaviour of this entity is what regulation is meant to control. Thus, centralization is key. If there is a centralized third party (along with purchasers with an expectation of a return), an ICO token would probably be considered a security by the SEC. In contrast, a cryptocurrency based on a decentralized network most likely would not be considered a security. Bitcoin and Ether are not securities because there is no centralized third party that controls the networks. The status of some of the others you mention (LTC, BCH) have yet to be as fully clarified but it is likely the SEC won’t see them as securities if the networks are sufficiently decentralized.

XRP is an interesting case. Its status is unclear. Ripple is centralized but XRP was never sold through and ICO. Nonetheless, Ripple is currently subject to a lawsuit alleging it is a security.

Another key part of whether a crypto is a security is if the purchaser had an expectation of return. If tokens are simply given away, they are not securities. Thus, some cryptos could also be structured more like a consumer item if the asset is bought for personal use and not as an investment.

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Writer interested in blockchain projects that will add to the social good

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