Chia founder argue XCH is not security, plans to register with SEC News ▸ US ▸ Regulation
Chia founder argue XCH is not security, plans to register with SEC
Gene Hoffman explained that XCH has not been sold to the public — which is a condition for classifying securities based on the Howey Test.
1 min read
Updated: Jul. 25, 2023 at 12:25 pm UTC
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Chia Network CEO Gene Hoffman has argued that the XCH token is not a security, however, the company was working to register with the U.S. Securities and Exchange Commission (SEC).
SEC Chairman Gary Gensler stated on Feb. 25 that “everything other than Bitcoin is a security.” He argued that every other crypto token apart from Bitcoin has a project team working to promote the tokens and entice investors
Based on the Howey Test, a token is considered a security if there is an “investment of money in a common enterprise with a reasonable expectation of profits to be derived from the efforts of others.”
In response, Chia Network CEO Gene Hoffman said that Chia’s native token ‘XCH’ is not a security. He argued that XCH had not been sold to the public — a necessary condition for classifying securities based on the Howey Test.
Chia to register XCH
Hoffman added that the company plans to register Chia equity with the SEC to make its operation legal.
However, Former Ripple developer Matt Hamilton said that registering equity did not stop the SEC from going after Ripple.
Hoffman explained that Chia’s case is different from that of Ripple given that the latter sold XRP without a registration statement. He said:
“Selling a token without a registration statement around may convert a token into security. So don’t sell them before there is a registration statement,” Hoffman said.
Hoffman added that he wouldn’t be surprised if Ripple loses its case against the SEC, as XRP was sold without a registration statement.
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Author 
Christian Nwobodo
Christian is a crypto-curious nerd who loves to investigate how protocols work under the hood. Christian is interested in DeFi protocol research, token economics, and on-chain analytics.
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Chia Network was incorporated in August 2017 to develop an improved blockchain and smart transaction platform.
