“Etherium - not a security”. That’s the resolution of William Hinman, director of corporate finance at the Securities and Exchange Commission (SEC).
During his speech at Yahoo! All Markets Summit - an industry event held in San Francisco on Thursday, Hinman told the summit participants that the agency "does not see much sense in equating Etherium to securities." He supported his position by the fact that there is no specific person or company that is responsible for Etherium project, and therefore "the asset cannot be an investment contract".
Hinman also noted:
"Based on my understanding of the current state of Etherium cryptocurrency, the Etherium network and its decentralized structure, current offers and sales of Etherium are not transactions with securities."
In this case, Hinman warned, "the results of the analysis of the asset and the decision that it is not a security is not permanent, and it will not necessarily apply to the instrument in the future." He also rejected the idea that instrumental tokens are not securities.
"Even digital assets that are tools and only work as a means of exchange in a decentralized network can be promoted and sold as an investment strategy and thus fall under the definition of securities," Hinman said.
Other cryptocurrencies, as Hinman notes, still can be attributed to securities.
"Although the token may not in itself be a security, the buyer's expectations during the sale will determine its classification," he said. If the buyer has a reasonable expectation of profit based on the actions of the seller, the token will most likely fall under the definition of the security.
Hinman confirmed that the SEC is ready to work with the token projects and their legal advisors to determine if the project should be registered with the regulator, thus confirming previous statements of other SEC representatives.
Officials in the regulatory field are increasingly concerned with cyptocurrencies and whether they fall under the definition of securities. Last week, the chairman of the SEC, Jay Clayton, said that Bitcoin is not a security, because it acts as an alternative to state currencies. In spite of the fact that the SEC has never tried to equate Bitcoin and Etherium with securities, regulatory experts expressed similar opinion of the relative cryptocurrency of the Etherium as well as of the ripple.
These comments appeared shortly after venture capitalists and lawyers who invested in projects based on the Etherium held a closed meeting with the SEC in an attempt to prevent such regulation. Apparently, their efforts have borne fruit, and Hinman confirmed that SEC does not consider cryptocurrency as a security. However, the representative of the regulator left a small "window" for further changes in his position, saying that "the status of the asset can be reviewed" - apparently in order to keep the industry "in good shape."