SEC Chairman Confirms ETH Not A Security
Today we have some interesting news to share when it comes to Ethereum's status as a token and what Jay Clayton the SEC Commissioner has to say. Now, according to Coin Center.org, Clayton confirmed that Ethereum and similar cryptocurrencies are not securities.
Mid last year during June 2018, William Hinman, the Director of the Division of Corporate Finance, revealed in a speech that the SEC does not consider Ether to be a security.
He mentioned that "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's primary argument is that Ethereum is sufficiently decentralized to disqualify it from being classified as a security token. Here Hinman also indicated that Ethereum will also be given the all-clear and not be subjected to heavy regulation by the SEC.
For those who aren't aware a security is often defined by the Howey's test.
So if a buyer invests money in a common enterprise, expecting a profit, predominantly from the effort of others, then the buyer is purchasing a security which comes under the compliance of the SEC (in the USA- and anyone who's offering it needs to be registered with the SEC.)
Coin Center was unsure whether the comments mentioned by Hinman, that Ethereum is not a security was a representation of the policy of the Commission or whether it was just the opinion of an SEC staff. Coin Center then worked with Representative Ted Budd to send a letter that was signed by several colleagues to Chairman Clayton asking him his thoughts and whether he agreed with Hinman.
Clayton responded, "your letter also asks whether I agree with certain statements concerning digital tokens in Director Hinman's June 2018 speech. I agree that the analysis of whether a digital asset is offered or sold as a security is not static and does not strictly inhere to the instrument. A digital asset may be offered and sold initially as a security because it meets the definition of an investment contract, but that designation may change over time if the digital asset later is offered and sold in such as way that it will no longer meet that definition. I agree with Director Hinman's explanation of how a digital asset transaction may no longer reasonably expect a person or group to carry out the essential managerial or entrepreneurial efforts. Under those circumstances, the digital asset may not represent an investment contract under the Howey framework."
As you guys can see here, The SEC has applied a thoughtful approach, applying the Howey Test to assess whether cryptocurrencies like Ethereum are considered securities. This is fantastic news. Is Ethereum a security has been one of the biggest questions and debates in the cryptocurrency space. If in the event where Ethereum is deemed a security (like shares of a company), this would require registration with the SEC and a number of additional regulatory rules and compliance. Furthermore, the news has cleared a lot of concerns and questions when it comes to the trading and acquisition of Ethereum. Investors can now purchase without worrying about any sudden regulatory surprised compliance-related news, reducing the volatility in prices of Ethereum and manipulation by misinterpretations of different media internationally. It also means that there will also be a clear road for CME to launch future of Ethereum.
So what are your thoughts on this situation?
Are you excited by Jay Clayton, the SEC Commissioner's thoughts on the situation?
And do you think greater regulatory clarity could kickstart institutional adoption?
Let me know what you guys think in the comments below!
It's Cindy with CryptoPig, Catch you guys around!
Please join us at our Telegram Group and follow us.
Disclaimer: Cryptopig content is written by a team of blockchain passionate people. We are not registered as investment advisors. Don’t take the information in this post as investment advice and make sure you do your own research before investing. Cryptocurrencies are a very risky investment, never invest more money than you can afford to lose.
Congratulations @cryptopigmedia! You have completed the following achievement on the Steem blockchain and have been rewarded with new badge(s) :
You can view your badges on your Steem Board and compare to others on the Steem Ranking
If you no longer want to receive notifications, reply to this comment with the word
STOPTo support your work, I also upvoted your post!
Do not miss the last post from @steemitboard:
Vote for @Steemitboard as a witness to get one more award and increased upvotes!