What Is a “Security-Based Swap” in the Context of Crypto Derivatives?

A security-based swap is a derivative contract where the value is based on the performance of a single security or a narrow group of securities. In the crypto context, if a crypto asset is deemed a security by the SEC, any swap (an agreement to exchange cash flows) based on that single crypto asset's price performance would be a security-based swap.

These are subject to SEC oversight and specific rules under the Dodd-Frank Act, including mandatory clearing and trade execution requirements.