Cardano, Polygon, Solana Defend Regulatory Status Against SEC 'Security' Label

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In response to the SEC’s lawsuits against Binance and Coinbase, which included Solana, Cardano, and Polygon, among others, the respective organizations behind these tokens are pushing back. As these three cryptocurrencies are among the most prominent in the lawsuits, they were included as examples of securities being traded on allegedly non-compliant cryptocurrency exchanges.

All three coins, boasting a combined market capitalization of over $21 billion, hold top 20 positions in the industry based on data from CoinGecko. This valuation is approximately a tenth of Ethereum’s total value. Despite a 30% drop over the previous week, these tokens showed signs of recovery on Sunday, slightly regaining some of their lost value.

Cardano was the first among the three altcoins to contest its regulatory status. Input Output Global (IOG), the blockchain research and engineering firm behind Cardano, claimed on June 6 that these recent lawsuits from the SEC would not interfere with their operations in any way. Emphasizing its willingness to work collaboratively with regulators, IOG hopes to balance consumer protection with innovation possibilities. The firm stressed that the blockchain industry and consumers deserve regulatory clarity and certainty, which cannot be achieved through enforcement action.

The Solana Foundation disagrees with the characterization of SOL as a security. We welcome the continued engagement of policymakers as constructive partners on regulation to achieve legal clarity on these issues for the thousands of entrepreneurs across the U.S. building in the…

— Solana Foundation (@SolanaFndn) June 10, 2023

The Solana Foundation, a Swiss non-profit dedicated to Solana, expressed a similar sentiment on the following Saturday, albeit in a more reserved manner. Rather than flat-out rejecting the SEC’s classification of Solana as a security, the Foundation disagreed with this label via Twitter. Echoing IOG, the Foundation emphasized the need for regulatory clarity for all actors in the digital asset space, particularly those operating within the U.S.

In the meantime, there’s a discussion within the Solana community about the feasibility of a network fork, similar to Ethereum’s response to the 2016 DAO hack. Some community members, like Twitter user HGE.ABC, suggest that forking could circumvent both the SEC issues and potential impact of FTX’s bankruptcy, which could result in a significant amount of Solana tokens owned by Alameda Research, Sam Bankman-Fried’s former trading firm, entering the open market over the coming years.

Bold but not a bad idea actually. Community fork solana will get rid of sec issue.

No bankruptcy will dump on you for next 3 years continuously.$ETH is a fork of $ETC and doing well.

Blink twice if you agree https://t.co/fWxbkMQ4aI

— HGE.ABC (@HGEABC) June 10, 2023

Polygon Response

On the same day as Solana Foundation’s comments, Polygon Labs also responded to the SEC’s viewpoint via Twitter. Rather than directly addressing the SEC or denying that its Ethereum scaling solution’s token is a security, Polygon Labs tried to disassociate MATIC from US markets. The company highlighted that Polygon was developed and deployed outside the US, supported by a global community. They emphasized MATIC’s crucial role in securing the Polygon network since its launch. Polygon Labs also noted that it conducted its operations without targeting US-based persons, potentially laying a legal groundwork regarding regulatory jurisdiction over MATIC.

In the wake of the SEC’s regulatory actions against Binance and Coinbase, the trading app Robinhood announced its discontinuation of support for Solana, Polygon, and Cardano. The platform cited that these lawsuits have shrouded these cryptocurrencies in uncertainty. As other companies might potentially follow Robinhood’s lead, each cryptocurrency’s founding organization is making concerted efforts to defend their respective tokens.”