We have clarification! The United States Securities and Exchange Commission (SEC) has reached a decision on Ethereum. SEC chairman rules Ethereum is not a security.
This follows the opinion of SEC Director of Corporation Finance William Hinman’s opinion that Ethereum does not exhibit the properties of a security.
Congressman Ted Budd along with Coin Center, an industry advocacy group, asked for clarification from Jay Clayton, the SEC Chairman, as to whether or not he agreed with Hinman’s remarks. Clayton responded by saying “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”.
Clayton wrote in a letter dated March 7th that a cryptocurrency can and may be sold as a security when it is first launched if it meets the definition of an investment contract – but importantly, he also noted that the digital asset may later be sold or offered to consumers without it being investments.
“I agree with Director Hinman’s explanation of how a digital asset transaction may no longer represent an investment contract if, for example, purchasers would no longer reasonably expect a person or group to carry out the essential managerial or entrepreneurial efforts. Under those circumstnaces, the digital asset may not represent an investment contract under the Howey framework.”
Clayton has clarified that he believes that the aspect of decentralization is important. According to Clayton, he believes that “generally, an asset like bitcoin, where [it’s] decentralized,” does not fit within a securities designation.
He further stated:
“No one is creating it for their own … control of bitcoin, it’s designed to be a payment system replacement for sovereign currencies,” he said. “We’ve determined that that doesn’t have the attributes of a security … as far as I’m concerned, that’s designed to be akin to the dollar, the yen, the euro … and it operates that way. People who purchase it are expecting it to operate that way.”
What do you think? Do you think this is bullish for Ethereum? Do you think this will have any impact on ERC-20 tokens? What do you think will happen to cryptocurrency as a whole from the SEC? Let us know what you think on our Facebook page!