Is Crypto a Currency Or Security? Litigation Involving The SEC May Provide Guidance

What started with Bitcoin in 2009 has developed into a market of over 6,500 digital assets increasingly competing with traditional products offered by financial institutions. The rapid expansion of digital assets, including cryptocurrencies, has led to increased regulatory scrutiny in which the key question is whether these assets should be classified as currencies or securities. This classification is significant because it determines the laws and regulations applicable to a particular asset. Determining whether a cryptocurrency is actually a currency or security is challenging. But a lawsuit filed by the Securities and Exchange Commission ("SEC") at the end of last year, which is currently pending in the United States District Court for the Southern District of New York, will likely provide additional guidance on this issue.