Bakkt, the digital assets platform based in New York, has recently made the decision to delist three major cryptocurrencies: Solana, Polygon, and Cardano.
The move comes as Bakkt seeks further clarity on regulatory compliance before offering a broader range of coins to its customers. This decision follows the recent lawsuits filed by the Securities and Exchange Commission (SEC) against Binance and Coinbase, alleging that both platforms were trading unregistered securities.
The SEC specifically named Solana’s SOL, Polygon’s MATIC, and Cardano’s ADA as securities. Bakkt, which completed the acquisition of trading infrastructure provider Apex Crypto for $155 million just two months ago, has adopted a compliance-first approach in light of increasing regulatory scrutiny. The platform primarily focuses on providing turnkey services to fintech platforms like Webull and Public.com to enable cryptocurrency trading.
Initially, Bakkt only offered Bitcoin and Ethereum, but the acquisition allowed for the expansion of its cryptocurrency offerings. To mitigate regulatory risks, Bakkt has been actively delisting tokens from its platform. During the due diligence process, Bakkt removed seven tokens, including Terra and Zcash. After the acquisition, Bakkt delisted an additional two tokens, ALGO and MANA, following an SEC lawsuit against Bittrex.
In May, the platform delisted 25 more tokens as part of its regular coin-listing review process and to align with the latest regulatory guidance. The recent delisting of Solana, Polygon, and Cardano reflects the challenging regulatory environment in the United States. Crypto firms are facing increasing uncertainty and are reevaluating their token listings as they navigate an evolving regulatory landscape.
Bakkt currently offers eight other cryptocurrencies, including Dogecoin, Litecoin, USDC, Shiba Inu, Bitcoin, and Ether. The question of whether cryptocurrencies should be classified as securities or commodities has become a central issue in the industry. The SEC has been targeting platforms that sell tokens considered unregistered securities, with Chair Gary Gensler asserting that the majority of cryptocurrencies, excluding Bitcoin, are securities.
Crypto firms argue that there is no clear path for registering securities or platforms with the SEC. Bakkt employs a committee that considers various factors when deciding whether to continue listing tokens, such as privacy features, money laundering risks, security issues, liquidity, trading volumes, and the likelihood of being labeled a security by the SEC. The company uses legal standards like the Howey test and examines similar tokens that have been classified as securities.
Bakkt’s proactive approach in delisting tokens has proven to be prudent, as tokens like Filecoin, which were removed from its platform, were later deemed securities in the SEC’s lawsuit against Binance. Bakkt’s CEO, Gavin Michael, emphasized the importance of regulatory clarity and expressed a commitment to working with regulators on compliance. However, he acknowledged that further challenges may arise in the future.
As the regulatory landscape continues to evolve, the crypto industry will need clear guidelines to foster innovation and ensure compliance. The proactive measures taken by platforms like Bakkt highlight the importance of navigating the regulatory environment while maintaining a commitment to offering safe and compliant cryptocurrency services to customers.
