The Securities and Exchange Commission (SEC) has made another announcement regarding its views on the regulatory status of cryptocurrency. William Hinman, the SEC’s director of corporate finance, made the statement on Thursday and confirmed that ether (ETH), the currency which powers the Ethereum network, will not be viewed as a security for regulatory purposes. The comments come two months after SEC chair Jay Clayton made a similar announcement regarding the status of Bitcoin.
Mr Hinman is quoted as saying that “the ethereum network and its decentralized structure, current offers and sales of ether are not securities transactions.” It appears that the SEC has concluded that when the structure, operation and ownership of an asset is sufficiently decentralized, it can no longer be considered a security in the conventional sense. Taken together, the two statements appear to suggest that the vast majority of cryptos will be subject to similar classification.
There are, however, likely exceptions to this rule. Most notably, the commission’s latest comments may suggest that the largely centralized structure of Ripple (XRP), and also of certain types of ICOs and token sales, could still make them securities in the eyes of the SEC. Indeed many of the actual tokens which run on the Ethereum network could be subject to such classification. Effectively any significant centralization, whether in terms of ownership or application, could still steer cryptos in the direction of a conventional security classification and the associated regulatory burden.
Ethereum bounced some 4% on the news, though at time of writing its gains were largely neutralised in the ongoing price correction.
