Or the more important question - will the SEC consider Bitshares to be a security and thus fall under their jurisdiction?

Rewind to October of 2017 and the crypto asset exchange Bittrex suspended trading of bitshares.  There was not a lot of communication or clarity over the decision making process, but over the months the consensus is that Bittrex's legal counsel recommended the suspension over ambiguity that Bitshares may be a security.  This is my opinion on what happened.

As a current law student I can put myself in the shoes of an overworked and risk-averse attorney.  When your task is to assess hundreds of new crypto coins and tokens for their status under the securities law framework you cannot afford to spend more than a few hours on each of the thousands of products.  Again, this is my opinion of what happened.  But it would be all too predictable to dismiss Bitshares as a security because it has the word "shares" in the title.  I am not kidding that this is potentially the level of analysis that is going into the legal interpretation of these new technologies.  

Fortunately, the US Supreme Court clarified that this type of analysis is insufficient to prove a given product should be categorized as a security.  

https://i.imgur.com/YBHbdxa.png

"In searching for the meaning and scope of the word 'security' in the [Acts], form should be disregarded for substance and the emphasis should be on economic reality." United Housing Found., Inc. v. Forman, 421 U.S. 837

The economic reality of the bitshares core coin is that its primary utility, its reason for being, is to pay operation fees and use the Bitshares exchange.  Usually when regulators and attorneys assess whether a given product is a security they begin with the Howey Test which I'm sure some of you are familiar with and I will follow up with a more thorough memo analyzing Bitshares in the coming weeks.  But the Forman case supports the proposition that Bittrex unreasonably suspended bitshares trading and Bitshares does not deserve status as a security under the American securities laws.