Tomorrow might be a big day for Ethereum 🔍 SEC to decide on security-status of the token

Tomorrow might be a big day for Ethereum, for better or for worse. The American Securities and Exchange Commission (SEC) is going to discuss whether or not the ETH token is deemed as a security.

SECURITY

A security generally is something that is sold as a speculative (=profitable, you hope) investment or to pay dividends through it's use, where the value of that investment depends on someone else to put in the work. I stole that definition from an article I found here, because truthfully I am no expert on the matter.

The rules for assets that are deemed securities are different than for non-security assets, however. First and foremost, in order to be a legal security an asset needs to be approved by the SEC. Since no (or almost none, anyway) ICO is currently registered as a security, including Ethereum which had it's ICO back in 2016 (the first of it's kind).

Tomorrow on May 7th the SEC will for the first time officially try to determine the status of Ethereum, which is likely to set a precedent for other cryptocurrencies with similar design philosophies.

FOR BETTER OR WORSE

Short term the SEC ruling could go both ways. If Ethereum is deemed a security the market is likely to take a big hit as people try to be ahead of eachother in the sell-off. Should the SEC judge positively on Ethereum, perhaps even deem it a totally new asset class this could have serious bullish implications and perhaps lead into a new Ethereum moon-mission.

In any case, a SEC ruling would provide much necessary clarity on the subject and long term should add to the stability and adoption of cryptocurrencies. Despite having pretty serious implications for the founders, who may be fined for selling illegal securities, I believe the Ethereum network in itself will not suffer and remain relevant. After potential fines are paid, the air should be cleared - a minor bump in the road in the long run.

The ecosystem would take a hit as well because licensed Securities are only allowed to be traded on licensed exchanges - and at the moment very few cryptocurrency exchanges are licensed to trade securities.

According to several experts in this article, it is highly unlikely for the SEC ruling to not go in favor of Ethereum however.

Personally I actually consider there to be a big change that there will be little to no outcome tomorrow. In my opinion it is much more likely for this matter to be too complex to be decided in one day, and I rather expect tomorrow to be the first in a series of meetings regarding the subject. After all, the decision regarding Ethereum is likely to affect regulation for the entire cryptocurrency market and as such a decision regarding this should not be taken lightly because it could have unforeseen and long lasting side-effects.

Still, I am of course hoping for the most positive outcome like the rest of you. As some crypto commentators have recently pointed out, Ethereum only needs to double in order to surpass Bitcoin. The Flippening might be closer than we think.

(Art by Roy Lichtenstein)