Regulation of Cryptocurrencies: SEC Considers Securities Classification and Saudi Arabia Discusses Halal Status There is a famous saying credited to Winston Churchill… The Americans will always do the right thing… after they’ve exhausted all the alternatives.' After witnessing a series of billion-dollar crypto enterprises go bankrupt, the hottest topic is finally the classification of cryptocurrencies. Bitcoin domination is on the rise. Traditional finance is having a heart attack once again. US SEC thinks cryptocurrencies are securities. Islamic scholars are divided on whether Bitcoin and cryptocurrencies are or not. Halal had a glorious comeback in the last two months but the are not following after the king because there is a distinct difference between Bitcoin and other cryptocurrencies by their nature. Bitcoin alts in US and Europe, is under a . for traditional fiat currencies. Bitcoin was created as a decentralized, peer-to-peer payment system, serving as a digital form of money. However, alternative cryptocurrencies (altcoins) are designed to serve as a form of payment within their respective networks only. For instance, Ether, Matic, and Avax are used exclusively when transacting on their respective blockchain networks. Altcoins serve as payment methods solely within their own network. Banks are crashing traditional finance systemic risk Bitcoin is a promising substitution There was but almost all other cryptocurrencies started with a under different methods. Other currencies were marketed and sold with a promise of . We still don’t know which network will be still alive 10-15 years from now. But if the or any project with a token you invested in will survive, you will definitely no pre-sale of Bitcoin, public sale success of the network network, exchange, game, storage, make a good profit. , has said that everything else other than Bitcoin is a security according to US laws. Because people to depending on the enterprise’s success. By doing this, there is an expectation of from other people’s efforts. In this article, we will go thru the case and learn what securities are, why cryptocurrencies can be considered securities, and why it is important. Gary Gensler, the chairman of the SEC invest in cryptocurrencies receive a profit making a profit By the way, we are talking about the classification of cryptocurrencies, we should take a look at other concerns about their status. For example, Saudi Arabia is a state, ruled under the . So it is important to classify which assets are Halal, and which assets are Haram to trade. For example, an investor can not invest in an alcoholic beverage company’s stock, it is haram but if the company is selling only orange juices, then it is halal. So the question is; Islamic law Sharia Is Bitcoin Halal? Are cryptocurrencies Halal? What are securities? Securities are . There is no clear definition of securities but we have a binding prejudication precedent from the [.](https://en.wikipedia.org/wiki/SEC_v._W._J._Howey_Co.#:~:text=W.%20J.%20Howey%20Co.%2C%20328%20U.S.,Act%20of%201933%20(15%20U.S.C.) After the decision of the Howey case, there is a four-prong Howey test to state if an asset can be classified as a security: tradable financial assets [case of Howey in 1946](https://en.wikipedia.org/wiki/SEC_v._W._J._Howey_Co.#:~:text=W.%20J.%20Howey%20Co.%2C%20328%20U.S.,Act%20of%201933%20(15%20U.S.C.) There is an investment of money. The investment is made into a "common enterprise." The investors expect to make a profit from their investment. Any expected profits or returns are due to the actions of a third party or promoter. Why can cryptocurrencies be considered securities? There are many similarities between securities and cryptocurrencies because of their natures. Cryptocurrencies are the most similar to cryptocurrencies among the securities and the similarities are listed below; They can be . issued like stocks They go public with like . ICOs stock IPOs Money is invested in. Expectation to make a profit. Other’s efforts generate profit. When you hold a and you check the items above, it is easy to say that they can be classified as securities. I want to give examples with well-known tokens, let's say, etc. When you hold those tokens, you can . It is like attending shareholders' meetings when you hold a company’s stocks. The platforms are expected to by collecting trading fees and . It is like companies sharing dividends. Howey test on cryptocurrencies , Sushi, Rose, Uni Cake, participate in the platform’s governance generate revenue sharing the revenue with token holders Why is it important? Securities are regulated financial assets. in the US is responsible for regulating and monitoring securities. Even though some crypto exchanges attempt to create a better-regulated environment for investors, it is still a grey area and there is confusion about the status of cryptocurrencies and exchanges. The Securities and Exchange Commission (SEC) If the SEC starts regulating cryptocurrencies, exchanges will be required to implement regulations. Then crypto exchanges will need special licenses to trade and to provide trading services. They will be required to show a certain level of reserves and funds to operate. Efforts to regulate cryptocurrencies are for . Crypto markets are highly volatile, fragile, and open to manipulations. Funds in traditional banks are protected by the government. If you read our blog article about , you can learn more about and their policies. investors' protection deposit insurance FDIC, EDIS, FSCS, deposit protection Regulated crypto markets will be much safer but it comes with a systemic problems in a decentralized world. Cryptocurrencies are assets that represent decentralized enterprises. Centralized will be a dilemma that will require long debates and discussions. control over decentralized assets Is Bitcoin Halal? As we put Bitcoin in a different category in terms of securities classification, we can do the same about deciding whether a Islamic experts and scholars are divided on this subject. It is a because it is very modern technology. Before asking if , we should ask if . Bitcoin is designed and used as a digital currency, but acceptance is limited and there are still doubts about its place. The more common acceptance of Bitcoin will increase, the easier it will be to answer the question. cryptocurrency is halal or not. grey area in the Sheria Bitcoin is Halal or haram Bitcoin is a currency . Bitcoin as a currency is halal The main reason why some people think that is that causes risks and losses that resemble gambling. This reason is not something the market can not overcome. Crypto prices are expected to settle down and will be priced in a reasonable range. Bitcoin and cryptocurrencies are haram high volatility Also published here.
