Popular Canadian chat app Kik made waves in 2017 when it announced its ICO and intentions to integrate a cryptocurrency into the Kik platform. In September, Kik raised almost $100 million through a token sale of their cryptocurrency KIN.

Since then, Kik has integrated KIN into a suite of social features while also allowing users to earn small amounts for completing micro tasks and redeeming the cryptocurrency for gift cards.

The goal is to drive adoption among users social behaviors, and some of the new upcoming KIN integrations are social tipping apps, watching video media with friends, goals trackers, social meeting apps, and others. Kik plans to integrate KIN into all of these and have it used as a currency.

However, KIK has recently taken a hard stance against the threat of enforcement actions by the SEC. The companies CEO, Ted Livingston, stated that KIN works like a currency and is not an unregistered security, despite what the SEC has claimed.

That’s despite the bombshell SEC chairman Jay Clayton dropped last February.

“I believe every ICO I have seen is a security,” he said.

While the entire sector has still been waiting to see exactly what the SEC will do, some action has been taken on a handful of projects.

The lack of certainty around the SEC and what actions it is planning to take has ground the ICO market to a halt and furthermore placed projects which had previously raised money in limbo as far as further development is concerned.

Livingston said the following in regards to the threat of the SEC labeling a project an unregistered securities offering:

“This is the thing that everyone in the industry is dealing with, but nobody wants to talk about,” Livingston said. “For all of us to be able to continue hiring, innovating, and competing, we need to change that.”

He outlined in a recent Medium post what the company has been facing from the SEC:

“We first heard from the SEC a few days after our token sale had already started, four months after we first announced it. It was a friendly contact for information, which we happily responded to.

“Since then, our conversations slowly ramped up — first with more questions, then with subpoenas over the winter, and then formal testimony in Washington over the summer. This process culminated with them issuing us a Wells Notice on November 16, 2018. This notice outlines why the SEC thinks there has been a securities infraction.

“On December 7, 2018, we submitted our Wells Response. This response outlines the many reasons why we think there has not been an infraction.”

His comments provide a rare testimony and look into what companies that have raised money via an ICO are facing from the SEC. In fact, Kik fighting back may set a precedent that could open the door for dozens of projects to move forward and innovate, instead of being hamstrung by heavy-handed regulation.

But why does Livingston think he can beat the SEC? Is KIN truly exempt from a securities classification?

One reason is found in the very wording of the 1934 Securities and Exchange Act which provides the legal definition of what a security is. In the act itself, it states that the definition of a security “shall not include currency”.

Kik is arguing that KIN is truly a currency. It is used, earned, and functions as currency. Currently, thousands of people are using it as a currency in the Kin app. Kik has also provided extensive documentation of examples in case law supporting their case.

This is more than a fight for the future of one project. It is a fight for a sane regulation that doesn’t strike down an entire sector where it stands. It is an argument for some nuance in how cryptocurrencies and ICOs are viewed, instead of a blanket designation of security status regardless of the structure of the project or token.

Livingston recognizes this, and in the last lines of his Medium post says something which speaks to the heart of the matter being faced by all of us involved in cryptocurrency right now.

“Crypto is set to usher in the next wave of widespread innovation,” he wrote. “If we want that innovation to include the United States we need to start talking about what is happening behind the scenes. We are all in this together.”