Is cryptocurrency a security?

The growing popularity of cryptocurrencies has led to a lot of heated debates about how they should be defined and regulated.

The argument centres on whether cryptocurrencies should be classified as securities – and the answer could have major ramifications for the way the world of digital assets operates going forward.

This is because anything classed as a security is regulated – in the US by the Securities and Exchange Commission (SEC) and in the UK by the Financial Conduct Authority (FCA).

Many people argue this goes against the very nature of cryptocurrencies, which are anonymous by design, are not governed by any single authority, and aim to be free of centralised regulation.

What is a security?

To understand whether cryptocurrency is a security, it’s important to understand what a security actually is.

A security is a tradable financial asset that has monetary value. It represents an ownership position in a publicly-traded corporation (via owning shares), a creditor…