SEC Goes Head-to-Head With Telegram, Makes a Guinea Pig of TON

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Earlier this week, the Chamber of Digital Commerce went ahead and filed an amicus brief for the ongoing court hearing taking place between Telegram - one of the world's most widely used encrypted messenger services - and the United States Securities and Exchange Commission.

As part of its central argument, the independent body states that the purchase agreements offered by Telegram were designed to fully comply with the SEC's existing securities rules.

The principles governing the U.S.'s existing securities laws were drafted nearly a century ago, when the SEC was first established by Congress.

The Securities Act of 1933 and the Securities Exchange Act of 1934 seem to have dictated much of the U.S. government's approach to financial regulation.

Not only that, but since SEC's inception, a number of interesting cases seeking to define the term "Securities" have been tried in front of the U.S. judicial system, with the most famous example being the SEC vs. Howey Co. trial, which resulted in the creation of the Howey Test - a set of criteria that can be used to determine the purview of the SEC's jurisdiction over securities.

"If a developer team retains certain assets and sells it to investors, it falls into the definition of security. I think that the U.S. legislation must be shaped to take into regard emerging technologies and new business models that hadn't been present not only in the days of SEC creation but also during the judicial battles on security definitions."

"They do have suggestions as to what the SEC could do regarding the case, with the primary one being the"reasoning used by the U.S. Supreme Court in SEC v. W.J. Howey Co," which is that an asset does not become a security "simply by virtue of being the subject of an investment contract.

For starters, the CDC claims that once Telegram's native tokens are issued, they will immediately be classified as utility tokens and thus won't be subject to securities laws.

"The U.S. securities laws have been around for more than eight decades and they have already made the point in 2017 with the Munchee case that calling a token a 'utility token' does not unmake it a security."

It is worth highlighting that the SEC classifies nearly every cryptocurrency, aside from Bitcoin and Ethereum, as securities.

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