The U.S. Securities and Exchange Commission (SEC) has dropped its lawsuit against Helium, marking another milestone toward regulatory clarity for cryptocurrencies. Meanwhile, the crypto community is anticipating a potential settlement between Ripple and the SEC.
The US cryptocurrency market has reached another regulatory milestone. This time, the Securities and Exchange Commission (SEC), known for its tough stance toward the crypto industry, has shown signs of easing tensions by withdrawing a lawsuit against Nova Labs, the developer of Helium, and proposing a pause in its appeal against Ripple, the company that develops XRP.
The brokerage's recent actions suggest we may be witnessing a shift in strategy that could have major implications for the future of crypto regulation in the United States.
BUY HELIUM (HNT)On the one hand, the Helium decision sets an important precedent, confirming that the distribution of tokens to incentivize the growth of decentralized networks does not necessarily imply the issuance of securities. On the other hand, a settlement with Ripple could mark a turning point in the relationship between the SEC and the crypto industry, potentially paving the way for more favorable regulation in the future. This regulatory shift by the SEC is opening up new opportunities for crypto projects seeking to innovate without violating established securities laws.
SEC dismisses lawsuit against Helium
In a move that surprised many, the SEC has withdrawn the lawsuit it filed in January of this year against Nova Labs, accusing the company of issuing Helium tokens as unregistered securities. This decision represents a significant victory for Helium, which operates a decentralized network of hotspots that provide IoT (Internet of Things) connectivity. The SEC's lawsuit had raised concerns about the legal status of the HNT, IoT, and MOBILE tokens used to incentivize participation in the Helium network.
In a blog post, the company reported that the SEC had decided to dismiss its claims that Nova Labs sold unregistered securities.
"We thank the SEC's new leadership for finally bringing clarity and look forward to a new era where innovation can truly thrive.", they said the developers.
The controversy with Helium centered on whether these tokens should be classified as securities, which would entail strict compliance with SEC regulations. Helium has always maintained that its tokens are utility tokens, designed to be used within the network's ecosystem and not as investments. Following the dismissal of the lawsuit, Helium firmly proclaimed that all supported hotspots and the distribution of its tokens "are not securities." This announcement marks a crucial turning point for the company and for regulatory clarity in the country's cryptocurrency market.
Certificate
Main Cryptocurrencies Course
Basic levelBit2Me Academy brings you a new course in which you will learn everything you need about the most important cryptocurrencies that exist today.
Helium claims its tokens are not securities.
Following the SEC's withdrawal of its lawsuit, Helium issued a statement reaffirming that its HNT, IoT, and MOBILE tokens are not securities. This statement has significant implications for Helium's business model and for other decentralized networks that use tokens to incentivize participation. Because they are not considered securities, these tokens are exempt from the strict regulations imposed by the SEC, facilitating their distribution and use within the ecosystem.
BUY HNT ON BIT2METo better understand the importance of this distinction, it is crucial to define what is meant by "security" under U.S. law. The Howey test, established by the Supreme Court in SEC v. W.J. Howey Co., is used to determine whether a transaction qualifies as an investment contract and is therefore subject to securities laws. This test considers whether there is an investment of money in a common enterprise with the expectation of profit primarily from the efforts of others.
Helium argues that its tokens do not meet this test, as their primary purpose is facilitate access and participation in the Helium network, not generating passive income for investors. Helium network users earn tokens by providing network coverage through their hotspots or by using the network to transmit data. These tokens can then be used to pay transaction fees, access network services, or participate in network governance.
Helium's stance aligns with that of other companies in the crypto sector seeking to avoid having their tokens classified as securities. Many of these companies argue that their tokens are "utility tokens" that provide access to a specific product or service. However, the SEC, under Gary Gensler, had taken a rather strict stance, arguing that many of these tokens are marketed as investments and therefore required to comply with securities laws.
Therefore, the SEC's current decision to withdraw the lawsuit against Helium demonstrates greater flexibility in its approach, although it is still too early to draw definitive conclusions.
PREPARE YOUR WALLETRipple and the SEC seek a negotiated resolution
In parallel to the Helium case, another important event has shaken the cryptocurrency world: Ripple and the SEC have filed a joint motion to pause the SEC's appeal and seek a "negotiated resolution." This case, dating back to December 2020, accuses Ripple of selling XRP, its native token, as an unregistered security. The court's initial decision largely favored Ripple, but the SEC appealed, prolonging the uncertainty over XRP's legal status in the market.
XRP is a cryptocurrency created by Ripple Labs, which aims to facilitate fast and cheap international money transfers. Unlike Bitcoin, which is decentralized, XRP is more centralized and controlled by Ripple Labs. The SEC argues that XRP should be considered a security because Ripple sold it to investors with the promise of a profit, while Ripple maintains that XRP is a digital currency used to facilitate payments and not a security.
BUY XRP HEREThe request to pause the appeal and the pursuit of a negotiated resolution in this controversial case suggest that both sides may be willing to compromise on some points to avoid a lengthy and costly trial.
An agreement could provide greater regulatory clarity for XRP and other cryptocurrencies, potentially boosting industry adoption and growth. However, negotiations could be complex, and there's no guarantee that an agreement will be reached, though the crypto community and several experts anticipate one will be reached later this year or in 2026.
Investing in cryptoassets is not fully regulated, may not be suitable for retail investors due to high volatility and there is a risk of losing all invested amounts.
