Mark Cuban Says Doing This Could Prevent SEC From Labeling Crypto As Securities
Billionaire investor Mark Cuban on Wednesday weighed in on the Securities and Exchange Commission’s (SEC) recent claims that Filecoin FIL/USD is a security.
What Happened: Cuban was responding to lawyer John Deaton’s post which criticized the SEC’s approach of regulating crypto through rulings made in proceedings with third parties, adding that this is “fundamentally unfair.”
The SEC had labeled Filecoin a security after Grayscale Investments launched its Grayscale Filecoin Trust in March 2021, providing investors with indirect exposure to FIL. In a letter sent to Grayscale, the SEC had stated that FIL “meets the definition of a security under the federal securities laws,” and demanded that the application be withdrawn.
Cuban proposed a way for cryptocurrency companies to avoid SEC lawsuits by releasing all their token supply without keeping any treasury reserves. He recommended that these firms should use their tokens for liquidity on DeFi platforms, dissolve the original issuing entity, and let the tokens circulate freely in the secondary market without direct ties to the underlying blockchain.
See More: A Stay At The Floating Palace From James Bond’s ‘Octopussy’
Why It Matters: The billionaire’s idea, which he tagged as “true decentralization,” is expected to prevent regulators like the SEC from shutting down tokens. This is due to the lack of direct ties to a single entity or organization, mitigating the risk of securities law violations and allowing for more flexibility in the token’s circulation.
Price Action: At the time of writing, BTC was trading at $4.31 down 0.64% in the last 24 hours, according to Benzinga Pro.
Read More: Bitcoin, Ethereum, Dogecoin Drop As FOMC Minutes Rock Investor Confidence: Analyst Who Called 2022 Market Bottom Predicts ‘Prime’ Reversal For King Crypto