Ethereum Rebounds Up Nearly 10% as SEC Confirms It's Not a Security

Galtero Lara
Junio 15, 2018

Bitcoin's and Ethereum's higher level of decentralization was cited as the reason why they were not classed as securities.

"Putting aside the fundraising that accompanied the creation of Ether, based on my understanding of the present state of Ether, the Ethereum network and its decentralized structure, current offers and sales of Ether are not securities transactions", William Hinman, director of the SEC's division of corporation finance, said in a speech prepared for a conference in San Francisco.

While the words carry weight from one of the SEC's highest officials, it's worth noting that they were spoken somewhat informally and may not represent a cohesive message across the SEC's regulatory staff.

Previously, SEC Chairman Jay Clayton had said that cryptocurrencies like bitcoin are not securities, though the agency had not definitively named any other coins that would be deemed currencies and not securities.

Along with ether, Hinman stated that the SEC would not classify bitcoin as a security, either.

"We are pleased with the SEC's decision to provide clarity with respect to current Ether transactions", Concannon said in a statement. While Ripple has said in the past that XRP tokens aren't securities, some believe that the company's centralized nature and control over the coins could put it under the SEC's jurisdiction.

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He also pushed back on the idea that there can be utility tokens which are not securities, saying "even digital assets with utility that function exclusively as a means of exchange in a decentralized network could be packaged and sold as an investment strategy that can be a security". "How about cases when there's no longer a company [involved]?"

That being said, Hinman cautioned that "the analysis of whether something is a security is not static and does not strictly inherent to the instrument".

When we think about how ether today is operating, at least, we see a highly decentralized network... Hinman clarified that the important thing the SEC needs to consider is how a security is issued, sold, marketed, and used, rather than any sort of label like "coin" or "token".

Last month, the Wall Street Journal reported that U.S. regulators are now examining whether ether and similar cryptocurrencies are securities under federal law.

Bitcoin has always been viewed by market participants as a commodity, which falls under the auspices of the Commodities and Futures Trading Commission. Cboe and CME Group Inc. begin offering Bitcoin futures past year.

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