SOL is not a security, says the Solana Foundation

The Solana Foundation took to Twitter to address for the first time the U.S. Securities and Exchange Commission’s classification of its native token, Solana (SOL), as a security. 

“The Solana Foundation disagrees with the characterization of SOL as a security,” reads a statement from June 10, noting that it welcomes the engagement of policymakers to achieve legal clarity in the digital assets space.

Solana’s ​​native and utility token was publicly launched in March 2020. SOL holders stake the token in order to validate transactions through its consensus mechanism. The token can also be used to receive rewards, pay transaction fees, and enable users to participate in governance.

The Solana Foundation disagrees with the characterization of SOL as a security. We welcome the continued engagement of policymakers as constructive partners on regulation to achieve legal clarity on these issues for the thousands of entrepreneurs across the U.S. building in the…

— Solana Foundation (@SolanaFndn) June 10, 2023

The SEC has labeled the SOL token as a security in two separate lawsuits filed on June 5 and June 6 against crypto exchanges Binance and Coinbase, respectively. The classification is based on several factors, including the expectation of profits derived from the efforts of others, as well as how the tokens are being used and marketed.

“This classification is significant because it subjects Solana and associated activities to a different set of regulations and compliant requirements. […] we are actively engaging with legal experts and are in communication with the SEC to understand and address their concerns,” stated the Foundation in a letter to its community.

Along with SOL, the SEC listed other nine cryptocurrencies to the securities’ classification on Binance’s lawsuit: BNB (BNB), Binance USD (BUSD), Solana, Cardano (ADA), Polygon (MATIC), Cosmos (ATOM), The Sandbox (SAND), Decentraland (MANA), Axie Infinity (AXS) and COTI (COTI). In its Coinbase suit, the SEC named 13 cryptocurrencies, doubling down on the newly classified tokens and adding six more: Chiliz (CHZ), Flow (FLOW), Internet Computer (ICP), Near (NEAR), Voyager Token (VGX) and Nexo (NEXO).

According to the SEC, the term “security” includes an “investment contract,” as well as other instruments such as stocks, bonds, and transferable shares. “A digital asset should be analyzed to determine whether it has the characteristics of any product that meets the definition of “security” under…