The new investigation by the US Securities and Exchange Commission (SEC) is thought to have far-reaching implications for the industry. It is almost certain to set a regulatory precedent as to whether cryptos are commodities or securities. While the news is already shaking the COIN share price, it is also causing turmoil for cryptocurrency prices. So, which cryptos will be sold as the market enters another period of uncertainty? Analyst Brenden Rearick has announced altcoins like SHIB that can be sold due to the SEC.
SEC investigating Coinbase: why will SHIB, AMP and SOL be affected?
This new investigation by the SEC looks at whether Coinbase has made illegal securities offerings by listing several different coins and tokens. Coinbase claims that it only lists commodities, not securities, and therefore cannot make an illegal security offer. If the SEC decides that these cryptos are securities, it is likely to greatly affect their price. It will also enable the SEC to go after other similarly structured cryptos. But how will he decide? Presumably, via the Howey Test.
The Howey Test originates in 1946 from the supreme court between the SEC and WJ Howey. Determines whether an asset is a security. The four items of the test are:
- This is an investment.
- It is in a joint business. This is the most confusing of the four, as the Supreme Court does not explicitly define “joint venture.” However, the SEC has already decided that joint ventures exist in most cryptos.
- Profit is expected.
- Profit comes from the efforts of others.
If you are looking for crypto to sell after this news, Brenden Rearick argues that coins that are most likely to pass the Howey Test should be looked into. Of course, it’s worth noting here that almost no crypto has been tested in court; this list is speculative. However, these entities are much more likely to pass than others.
First coin on the list: Shiba Inu (SHIB)
Shiba Inu owners won’t be happy if the SEC decides that Coinbase has listed assets that are unregistered securities. Although SHIB has strong private owner support, it is a token that can pass the Howey Test very well. As the world’s second largest meme coin by market cap, it will become a huge target. According to Brenden Rearick, the Shiba Inu is a money investment that passes the first part of the test. It is under a joint venture because there is what is called a “horizontal partnership” in SHIB investment. The success of each investor depends on the success of all other investors’ assets by raising money in the Shiba Inu ecosystem.
Undoubtedly, there is a profit expectation from SHIB. The tweets of thousands of SHIB bulls mentioning the token with the caption “to the moon” prove that they expect profits from their investments. Finally, profits come entirely from the efforts of Shiba Inu developers, completing point four. According to Brenden Rearick, he classifies SHIB as a security. While it can be argued that investors have an impact on the price of the token through coin burning, this effect is negligible. On the contrary, those who really rock the boat; are projects promoted and published by developers. Things like the SHIB metaverse and the Shibarium layer-2 network are the real efforts that determine profits.
AMP is also at risk
According to the analyst, AMP is one of the most urgent cryptos to sell if you are worried about this SEC investigation. After all, he is called private in the investigation. This means that if the SEC successfully proves that Coinbase is running unregistered securities offerings, it will be one of the first tokens to be affected. Just like SHIB, AMP holders purchased their tokens through investment. Investors saved money for the project by sharing the same risks and profits. This means that there is a horizontal partnership establishing a joint venture. Furthermore, the token also has an online community that talks at length about the price action of the crypto. Through these comments, the SEC can expect investors to buy in anticipation of profits.
The fourth item of the test is that these profits are made through the efforts of Amp developers. This is because crypto depends on the success of Flexa, a payment app created by developers. Without Flexa, Amp doesn’t even have a practical use case, as users can only pay with AMP through the Flexa app and only through certain partners. Investors cannot ensure Amp’s success themselves.
Latest altcoin: Solana (SOL)
According to the analyst, Solana could be one of the best cryptocurrencies to sell right now. The network is even battling a lawsuit that threatens to disable it as a security. If he loses, the SEC could be knocking on the network next. It’s not hard to see how Solana passed the Howey test. It is an investment where many investors pool their assets to share profits and risks. It also leads investors to expect profits through the actions of the central development team; The Solana layer-1 network is the tool that drives this expectation.
This is a simple enough argument. It’s also an argument that Solana should defend herself in the near future. Investors have filed a class action lawsuit against Solana Labs, alleging that crypto is an unregistered security. In addition to complaints about the unreliability of the network, plaintiffs say Solana advertises itself as decentralized. He claims that he misled investors about the coin supply. He quotes the Howey Test directly, claiming that Solana is a security.
6022
