During the Yahoo! All Market Summit in San Francisco on June 14th, SEC official William Hinman made it clear to the attendees that the agency does not consider Ether to be a security. In his words, he said that the SEC “doesn’t see a lot of value in treating Ether today as a security.” He went on to explain that there is no central group or figure behind Ethereum. Thus, the assets did not represent an investment contract.
This latest declaration follows a long line of pronouncements that have seen various regulatory officials giving their opinions on whether Ether is a security or not. Former officials of the SEC are the ones who have mainly given these opinions; the SEC has mainly stayed away from this debate though. When they have made a comment, it has been mainly about ICOs and token sales. At times, they have talked about them in a disparaging manner.
Hinman’s Pre-Written Remarks
In his pre-written remarks, Hinman said that based on his understanding of Ether, the entire networks, and the decentralized nature, all offers and sales of Ether are not securities transactions.
He also cautioned that the “the analysis of whether something is a security is not static and does not strictly inherent to the instrument.”
Hinman also took the opportunity to refute the idea that a utility token could also fail to be a security. He said that even when a digital asset with a utility functions only as a means of exchange, it could be sold as an investment strategy. This would thus make it a security.
Other Crypto Could Be Securities
Mr. Hinman also informed the attendees that other crypto could still be considered securities. He said that a token by itself was not a security. However, the expectation of the buyer during the sale could be used to determine whether it was a security or not. He said that if a purchaser had a reasonable expectation that they could make a profit from the purchase, based on the actions of the seller, it is then a security.
He made it clear that the SEC was open to working with ICOs and their legal advisors to establish if a project should be registered. This is a sentiment, which has been expressed by many other SEC officials.
This Could Be Good for Ether
This announcement by the official will clear a major obstacle for the establishment of Ether’s future. This is something that the COO and President of Cboe Global Markets Inc, Chris Concannon has been considering since the launch of Bitcoin futures in December 2017. Since last year’s surge in the price of crypto, financial regulators have intensified their crackdown on the crypto world.
Image Credit: Youtube
What do you think about this surprise declaration by Hinman? Leave us your thoughts in the comments section below.