You may have noticed that Binance and Coinbase have been sued by the US Securities and Exchange Commission (SEC) for trading unregistered securities. Several cryptocurrencies have been listed as securities by the SEC, but Ethereum is not listed, even though it does qualify as a security, according to Dorsey.
What is an effect?
We speak of an effect for financial legislation if a financial instrument carries with it a certain profit expectation that arises from the activities of the issuing party. For example, Ripple has been battling with the SEC for years over whether their XRP token qualifies as a security under US law.
If that is the case, you may not just put a token on the market. Then you must first register such tokens with the financial regulators and stock exchange platforms are not allowed to simply offer these tokens on their platform.
To offer a security, a stock exchange platform needs the right licenses and it must of course be a registered security. If Ethereum qualified as a security, it probably means that the coin would not be available on exchanges for much longer.
Plain language from Dorsey
Jack Dorsey is a big name in the crypto community. His saying that Ethereum is a security has the potential to mean a lot. For a large part of the industry, it is to be hoped that Dorsey will not be proven right, because if Ethereum were to disappear for this reason, there would be little left.
If that is the case, then the Bitcoin maximalists are right. After all, they have been saying for years that Bitcoin is the only thing that matters in this world. Dorsey further indicates that Coinbase should return to a full focus on Bitcoin, rather than the diversified focus it currently has.
In this respect, the coming months could have enormous consequences for the entire industry. In any case, it seems that the SEC is not slowing down and is planning to wreak havoc on the crypto landscape.