Solana Foundation declares SOL not a security.
The Solana Foundation has responded on Twitter to the U.S. Securities and Exchange Commission’s classification of its native token, Solana (SOL), as a security. The statement from June 10 disagrees with the characterization of SOL as a security and welcomes policymakers’ engagement to achieve legal clarity in the digital assets space. SOL holders stake the token to validate transactions and can also use it to receive rewards, pay transaction fees, and participate in governance.
The SEC has classified SOL as a security in lawsuits filed against crypto exchanges Binance and Coinbase. The Foundation acknowledges that this classification subjects Solana and associated activities to different regulations and compliant requirements. They are actively engaging with legal experts and the SEC to address their concerns. Along with SOL, the SEC listed nine other cryptocurrencies in Binance’s lawsuit and 13 cryptocurrencies in Coinbase’s lawsuit.
The Solana Foundation did private sales of tokens to institutional investors and venture firms in the past. These private sales were reportedly performed under a simple agreement for future tokens (SAFT), which is a security issuance for the eventual transfer of digital tokens from crypto developers to investors. Under token sales through a SAFT, Solana also filed private offering forms with the SEC, and investors were subject to lockups. A public sale of SOL tokens was held during Solana’s initial coin offering (ICO) in March 2020, allocating 8 million tokens to the public, or 1.6% of its initial token supply. This sale of tokens raised $1.76 million for the Solana Foundation at $0.22 each.
In an opinion piece about the recent developments, legal expert and Bloomberg’s contributor Matt Levine noted that previous securities offers of SOL should not make the token a security now.
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The Solana Foundation disagrees with the classification of SOL as a security but is working to address the SEC’s concerns and achieve legal clarity in the digital assets space.