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Can They Delist Altcoins Labeled as Security?

can they delist altcoins labeled as security

The market has been recently moved with the delisting of several altcoins by United Stated authorities concerning exchange and investment operations. The prices of the delisted altcoins has been experiencing the lowest value as the holders of these subcoins rush to discard the coins; therefore they create an uncertainty about their future. The question is: is the situation really bad as it seems?

Over the past few years, by the decisions made after discussions and investigation run by SEC and CFTC, more than 50 altcoins have been classified as securities and this had a significant implication on the market; interestingly enough, quite a few of these alternative cryptocurrencies are no longer exchanged or traded as they lost their initial value.

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Understanding the Howey Test and its Impact on Securitized Altcoins

The “HOWEY TEST,” a fixed standard which was developed to determine whether an investment contract exists, is the primary factor in order to determine whether the investigated altcoin should be considered securities. A cryptocurrency that aims to be used in the exchange and trade operations inside US Market must meet the test’s specific requirements in order to qualify as a security.

It is also essential to keep in mind that the current number of altcoins that have been registered as a security is fifty; nevertheless, it is expected to experience a rise in near future. With the possibility of SEC convincing the courts to adopt a more flexible and serene implementation of Howey Test, it is expected that nearly all alt-coins potentialy fall under the securities laws.

Currently, a crucial point has emerged as a result: It is difficlut to declassify an altcoin once it is classified as a security, obviously. It is not possible for an altcoin to be enlisted under this mentioned tag without enlisting with theSEC and going through the significantly regulatory methods; therefore, there are a few important things to consider.

First of all, the question regarding the Howey Test causes a major unrest as there are many concerns relating to the variety of questions. Since SEC finds peculiar confidence with former conflicts, it may be regarded as impossible to avoid being classified as a security; for example, if three out of the four test conditions in the test are met.

Delisting Implications and the Uncertain Fate of Altcoins in Legal Battles

However, the final verdict of the XRP case might resonate in a different way related to security discussions. The crypto industry may undergo significant shifts; moreover, this shift might cause the court to rule against relaxation. As the time goes by and we hear more news from the subject, the conditons will uncover the degree of this effect . In the meantime, several organizations have decided to delst the mentioned tokens in order to evade conflict with the SEC.

It is clear as day; despite the fact that delstings might occur for many other altcoins, the objection to the verdict will be inevitable . 

Nevertheless, the past experiences shows us that the majority of businesses are showing tendencies to comply with the terms of SEC. Moreover, delisted alt-coins can be relisted on the platforms after they have are successfully confirmed as securities. The interesting case of LBRY , which won the cases against the limitations last year and regained its listing privileges , including on Coinbase , is a notable precedent.

Rather than thoroughly setting the focus on their classification as securities , the resilience of altcoins in ongoing legal battles should be taken into consideration when the discussions related to the future of altcoins are brought forward. Ripple’s success could provide a milestone example for other altcoins, making the way easier for them to follow. However, an unfavourable verdict may lead to entail significant litigation costs and compensation.

Investors in the market circles have expressed their concerns after observing the delisting of beforementioned altcoins. The future of these altcoins is still in ambiguous condition since SEC and the Howey Test are still influential over the decisions. The industry is patiently but eagerly awaiting precedents that will frame the tomorrow of cryptocurrencies once the confrontations in the courts are finalized.

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