$0.38877 4.81%
XTZ · 19w

Why Tezos Isn’t a Security – ChainRift – Medium

We’ve followed our strict internal review process regarding token ‘security’ classification and although XTZ is still very new, it’s clear to us that it doesn’t completely satisfy the Security and Exchange Commission (SEC)’s current criteria of a security. We’re excited to bring Tezos trading to the cryptocurrency exchange world, and we hope you’re excited to get involved in this exciting project!

Tezos is a decentralized blockchain that allows formal verification, a technique which uses mathematics to prove the correctness of the code governing transactions. There will be secure applications and smart contracts on the Tezos blockchain, while at the same time avoiding some of the shortcomings of similar alternative chains.

Why isn’t Tezos a security?

There is a relatively clear checklist that the SEC uses to measure up new cryptocurrency and token projects on whether they are securities or not: when we test this against the objective facts regarding Tezos, it doesn’t appear to meet the threshold of a security. This may sound risky; however, we’ve weighed the risks and believe that the Tezos token is not a security.

It’s on a governed chain, which may set conservative crypto enthusiasts’ alarm bells ringing, but the method in which the chain is governed is key: it’s not a controlling central authority (which in our eyes would immediately make XTZ tokens a security) and is more akin to how Bitcoin forks without the mess. The chain must move with the majority (just like Bitcoin). This decentralized element is a core reason why it’s likely that the Tezos token isn’t going to be labelled a security by the SEC.

A bit more detail…

There are three elements that when all are satisfied, make an ICO project a security. All really must be satisfied: if two out of the three elements are met, it certainly increases the risk, but it probably doesn’t make the project a security. Of course, there are exceptions to this general rule, exceptions whe...

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