2 Reasons Cardano’s ADA Is Unlikely To Be Labeled A Security As Industry Scrutiny Intensifies

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<div style="margin-top:0px;margin-bottom:0px" class="sharethis-inline-share-buttons"></div> <p>Crypto Capital Venture founder and industry pundit Dan Gambardello, is confident that Cardano’s native token <a target="_blank" href="https://zycrypto.com/cardano-clinches-important-development-milestone-as-ada-ushers-in-super-bullish-valentine-upgrade/">ADA</a> won’t be classed as a security in the United States as the Securities and Exchange Commission (SEC) takes center stage with major enforcement actions that many are interpreting as part of a brute-force effort to marginalize the whole cryptocurrency sector.&nbsp;</p> <h2 id="h-ada-as-a-security-no-chance"><strong>ADA As A Security? No Chance.</strong></h2> <p>Lately, the SEC has been focusing much of its crackdown on entities that many crypto veterans would consider honest actors after a year in which frauds destroyed tens of billions of dollars in investor funds.</p> <p>The ongoing scandal with Binance USD (BUSD), a U.S.-dollar stablecoin with Binance branding, has raised existential questions about the legal status of other cryptocurrencies in the market.</p> <p>Nevertheless, Crypto Capital Venture’s Dan Gambardello quashed fears that ADA could be classified as a security. Gambardello noted that ADA’s initial coin offering (ICO) was conducted in Japan, with U.S. investors not allowed to participate in the fundraising. This means the SEC cannot file charges against Cardano’s creator Input Output Global (IOG), or its commercialization arm Emurgo for issuing and marketing ADA without registering with the agency.</p> <figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper"> <blockquote class="twitter-tweet" data-width="550" data-dnt="true"><p lang="en" dir="ltr">ADA will likely not be considered a security. 2 simple reasons:<br><br>1. <a target="_blank" href="https://twitter.com/hashtag/Cardano?src=hash&ref_src=twsrc%5Etfw">#Cardano</a> ICO was in Japan, not available to US investors.<br><br>2. A judge recently ruled in LBRY case that secondary sales of <a target="_blank" href="https://twitter.com/search?q=%24LBC&src=ctag&ref_src=twsrc%5Etfw">$LBC</a> tokens were not securities. This sets an important precedent for things like <a target="_blank" href="https://twitter.com/search?q=%24ADA&src=ctag&ref_src=twsrc%5Etfw">$ADA</a>.</p>— Dan Gambardello (@cryptorecruitr) <a target="_blank" href="https://twitter.com/cryptorecruitr/status/1625644120545820674?ref_src=twsrc%5Etfw">February 14, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8">

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SEC’s Latest Crypto Scrutiny

Following the SEC’s inconsistent and uncertain enforcement regarding crypto assets, blockchain companies’ goal is to anticipate any possible scenarios that could be seen as illegal actions and deal with likely issues before they escalate.

This is especially true of moves taken against the U.S.-headquartered digital asset exchange Kraken, which coughed up $30M in an SEC settlement and agreed to discontinue its crypto staking program. The SEC has also given a notice of potential enforcement action against Paxos. The regulator alleges that the BUSD stablecoin is an unregistered security.

Furthermore, Ripple is still mired in a two-year-long legal scuffle with the top U.S. securities watchdog. Many believe we are likely to know the security status of XRP this year as the case concludes.

Having said that, ADA fans can rest assured that the SEC will not be dropping the hammer on Cardano progenitors any time soon — as suggested by Gambardello.