Ethereum Rallies After SEC Official Says it Is Not Security
But some other cryptocurrencies may be, states William Hinman
The price of Ethereum (ETH) surged more than 10% on Thursday evening (UTC) after a top official at the US Securities and Exchange Commission (SEC) stated that the second most valuable cryptocurrency is not a security.
Speaking at the Yahoo Finance All Markets Summit: Crypto, William Hinman, director of the SEC’s division of corporate finance, said: “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.”
Hinman cited the cryptocurrency's decentralized and public network and the lack of a third party expecting to make a profit as reasons why the SEC will not treat it like a security.
This is the first clear statement by the financial watchdog on how they plan to regulate Ether. SEC Chairman Jay Clayton has previously said that Bitcoin is not a security, but the agency had not cleared the status of any other virtual coin. Concern, in particular, had mounted around Ether due to its widespread use and because the Ethereum Foundation initially sold it in a manner that some in the financial industry have said resembled securities offerings.
The SEC will now look at other digital assets on a case-by-case basis. If a cryptocurrency network is not sufficiently decentralized and buyers have expectation of managerial stewardship from a third party, the respective coin will be subject to federal securities rules, Hinman remarked.
Crypto Market Surges
Digital currencies rallied on the back of the news, with the global cryptocurrency market capitalization returning to above USD 4 billion in just one hour. Among top 100 coins by market cap on Coins.Online, all lied in the green over the past 24 hours.
The ETH price rose more than 10%, exceeding USD 520. BTC posted more modest gains, standing just over 5% up at USD 6660.
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