Explainer: What makes a crypto asset a security in the US?

economictimes.indiatimes.com:

Ripple Labs got a landmark ruling from a federal judge who said some of the company's XRP token sales were not subject to securities laws.What did the Ripple judge say? US District Judge Analisa Torres in New York found some digital token sales by Ripple did not violate the law as alleged by US Securities and Exchange Commission. The SEC sued Ripple for conducting an unregistered offering of $1.3 billion in XRP between 2013 and 2020.

Torres ruled that Ripple's sales on public exchanges to retail investors were not offers of securities under the law because purchasers did not have a reasonable expectation of profit tied to Ripple's efforts. Those sales were «blind bid/ask transactions,» she said, in which buyers «could not have known if their payments of money went to Ripple, or any other seller of XRP.» It was the biggest win for a cryptocurrency company in a case brought by the SEC.

The regulator got a partial victory because Torres also ruled that Ripple violated securities laws when it sold XRP directly to sophisticated investors such as hedge funds.What has the SEC been alleging? The regulator has brought more than 100 enforcement actions against crypto companies, claiming digital assets are securities. The biggest case was brought this year.

The SEC said Coinbase, the largest US cryptocurrency platform, allowed users to trade at least 13 crypto assets that should have been registered as securities, including tokens such as Solana, Cardano and Polygon. Coinbase denied the allegation.

Industry players have insisted that most cryptocurrencies — which operate on a database shared across a network of computers, known as a blockchain — do not fit the US legal definition of securities. They say the SEC has been vague and