I already know most people will read the headline of this article and instantly think it’s just fud. But this is something you seriously have to consider if you are holding coins that were issued via an ICO, a pre-sale, an airdrop, or any method other than simply being a public mined coin from the start. Yes, even an airdrop could fall under SEC securities jurisdiction.
The reason is because there is a very high possiblility that the SEC will determine that most of these tokens and coins are indeed securities. If that is the case, most exchanges, and definitely those that are U.S. based or allow U.S. customers will no longer be able to list them. Obviously, this could very well cause the value of those coins to sink rapidly.
Some exchanges could try to operate under what is an Alternate Trading System which as the name suggests is a type of trading platform under the SEC that has certain exemptions. However, even the legality of this is not known so any exchange doing this could also be facing a court battle if they choose to list tokens that are classified as securities.
So what does all the mean for the retail investor who is holding coins or tokens that could be classified as securities. First of all, you have to make a decision. If you think no amount of regulation will have any long term effect on the coins you hold and the marketplace will somehow find a solution, then you really don’t have to do anything. I don’t believe this is a wise position to take, but if after research you believe this to be true, then simply keep investing as you have been.
If on the other hand you believe that this type of regulation could very well be a possibility and the coins you hold could be labeled as securities, I would suggest deciding if you want to take profits or at least some profits, if there are any. Of course, many people are probably holding coins at a loss at this point, so there may be no profits to take. However, if you do end up with some profits in the short term, it may be wise to set up a plan to take some profits at different price levels.
The reason I say this is because no matter how much you believe in the alt coins you hold, they are a highly risky investment. But on top of the risk that they may never deliver a working product, you also have the risk that the SEC could cause them to be de-listed on most major exchanges.
Like I said, this isn’t fud, it’s a real market situation that you have to be aware of. At the very least, I suggest everyone keep a very close eye on the SEC statements moving forward. For example, the SEC has already put out statements that they believe most tokens are indeed securities. You need to keep a close eye on these statements to get an idea of which direction the SEC and other regulatory bodies are leaning.