William Hinman, Head of SEC’s Financial asserts that bitcoin and Ethereum are not Securities. The statement was made at the Yahoo Finance All Market Summit: Crypto in San Francisco on Thursday, June 14.
“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 says “the name isn’t important, but the way in which it’s sold, promised, and behaves is the key deciding factor”. Hinman definitively confirmed that the commission would not be classifying ether or bitcoin as securities. The statement aligns with another SEC official, SEC Chairman James Clayton.
This doesn’t change what we already know of SEO rules on Cryptocurrencies as reassured by Hinman. His states do help to resolve the confusion faced by companies who might face possible issues with using a token if they don’t register with the SEC.
“Can a digital asset originally sold in a securities offering eventually be sold in something other than a security?” he asked. “How about cases when there’s no longer a company [involved]? I believe in those cases [the] answer is a qualified yes.”
Hinman said “form is disregarded for substance,” in the SEC’s thinking. The economic realities, he said, are more important than how something is labeled.
If a cryptocurrency network is sufficiently decentralized and purchasers no longer have expectation of managerial stewardship from a third party, a coin is not a security, Hinman added.
Regulation is a key area for the global adoption of cryptocurrencies. This statement will no doubt Reassure cryptocurrency proponents, however, there is the large set of cryptocurrencies and ICO’s which can be view as securities via the Howey test.
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