SEC Representative Says Ethereum is NOT a Security
The director of corporate finance of the Securities and Exchange Commision (SEC) from the US declared that Ethereum is not a security.
The director of corporate finance of the SEC, William Hinman, declared at the Yahoo All Markets Summit from San Francisco that the regulators don’t have any interest in labeling ethereum as a security. He added that since nobody controls the cryptocurrency, “the assets may not represent an investment contract.”
This new statement comes after, the SEC has tried in the past months to decide if ethereum is the initial offering of ethers is subject to the securities laws. This new statement creates even more confusion around ethereum, since the head of the SEC, Jay Clayton declared recently that cryptocurrencies like bitcoin are not securities, but ethereum could be.
However, his colleague William Hinman declared in a release:
“Based on my understanding of the present state of ether, the ethereum network and its decentralized structure, current offers and sales of ether are not securities transactions.”
Hinman also explained that “the analysis of whether something is a security is not static and does not strictly inherent to the instrument.”
The regulator disclosed that the present laws could make transform a utility token into a security as well. He explained that even though the utility tokens are used as means of exchange on a decentralized platform, they can also be sold as investment strategies; thus making them securities.
A rather confusing statement made by Hinman was the idea that other cryptocurrencies could be classified as securities based on the investor’s expectations. He said that at first, a token might not be a security, but if the investor is expecting to make profits with his acquisition that could transform the token into a security.
In the end, Hinman added that the SEC is ready to start collaborating with projects in order to help them to decide in which class the token could be registered.
In April the head of the SEC, Jay Clayton declared that cryptocurrencies are a “complicated topic” since there is a multitude of crypto classes. Despite this, he stated that he managed to place bitcoin in the category of “pure medium of exchange” since a currency substitute is not considered to be a security.