SEC Spokesman Says Ethereum and Bitcoin Are Not Securities: Relieved Markets Rally

Lloyd Doyle
June 15, 2018

As the United States government begins to crack down on ICOs, the head of the Division of Corporation Finance at the Security and Exchange Commission (SEC) doesn't believe ether (ETH) should be classified as a security. President Chris Concannon said the SEC's decision could increase the chances that regulators will sign off on Ether futures.

Speaking on Thursday at the Yahoo Finance All Markets Summit: Crypto, William Hinman, director of the SEC's division of corporate finance, said that, at least "as now structured", ether will not be regulated as a security by the SEC.

Similarly, labeling an investment opportunity as a "coin" or a "token" does not make something not a security, Hinman added. While a token in and of itself may not be a security, the purchaser's expectation during a sale will determine its classification, he said.

This analysis seems to prioritize circumstance over semantics when deeming a token's securities status.

The statements are the latest in a long line of remarks that have found various regulatory officials opining on whether the nature of the sale in which ether was issued made it subject to US securities laws.

Ether investors got a reprieve Thursday when a top USA regulator said transactions involving the token aren't subject to federal securities rules, ending months of speculation that had weighed on the second-most valuable digital currency.

"Can a digital asset originally sold in a securities offering eventually be sold in something other than a security?" he posits, eventually concluding that it cannot. "I believe in those cases [the] answer is a qualified yes".

The speech shed substantial clarity on a question that has loomed over the industry for some time: namely, whether or not ether would be ruled as a security.

"When we think about how ether today is operating, at least, we see a highly decentralized" network, not the type of centralized actor that characterizes securities offerings, Hinman said.

Hinman made clear that the SEC hasn't changed its view on initial coin offerings, in which companies raise money through sales of digital tokens. "We are thrilled to see it take a strong pro-innovation approach to this nascent technology".

This morning, Valerie Szczepanik, the SEC's first crypto czar, issued what looks like a caveat on this front, stating in a panel at the summit that individual staffer comments may not be wholly in line with the SEC's official stance.

Other reports by Iphone Fresh

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