A woman holds a smartphone with the USD Coin (USDC) logo on the screen. Photo: SOPA Images/Bloomberg StableCoins Are (Not Just Similar to) Money Market Funds
This article discusses a correlate of the proposition that digital assets are investment contracts and therefore are securities, namely that pools of digital assets are investment companies as defined in the Investment Company Act of 1940 (the 1940 Act).
May 08, 2023 at 09:23 AM
8 minute read
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Before TerraD and Luna tokens crashed and the FTX exchange imploded, Securities and Exchange Commission Chair Gary Gensler gave a speech laying out his views on the regulation of the digital asset markets. Among other things, he said: "When a new technology comes along, our existing laws don't just go away." He reiterated the position of his predecessor Jay Clayton: "Without prejudging any one token, most crypto tokens are investment contracts under the Howey Test" adopted by the U.S. Supreme Court in 1946. The SEC and other federal regulators have spent the past year bringing enforcement actions against digital platforms that ignored the regulators' warnings.
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