Ether is not a Security S.E.C Director Says – What Does this Mean?

The United States’ Security and Exchange Commission’s (S.E.C) director for corporate finance Mr. William Hinman said in a speech at the Yahoo All Markets Summit yesterday Thursday 14th June, 2018 that Ether is not to be classified as a security and as such does not require any form of regulation from S.E.C.

 

He intimated that since Ether runs on the Ethereum Blockchain, a decentralized network which promises no expected returns to holders, it will not be regulated by SEC.

 

He adds that Ether is similar to Bitcoin which is also decentralized and not a security. He purports that decentralization is key here in determining whether or not a cryptocurrency can be classified as a security – this therefore raises questions especially for folks in the crypto world who think Ripple is a centralized network – many are beginning to postulate that XRP could be regarded as a security. But can that really be the case?

 

The speech shows that Hinman is of the view that when a network is adequately decentralized, such that there is no central controlling authority, it will not be considered as a security and as such does not need any form of regulation as it more or less acts just like fiat or mainstream currency.

 

When quizzed about Initial Coin Offering (ICO) tokens, he admits that some tokens could take the form of utilities. Such tokens that can be used for personal stuff like paying for club membership without taking the form of an investment instrument that promises returns may be exempted from consideration as securities.

 

The comment by the SEC director seems to have created a positive atmosphere around Ether as it spiked by about 10% to around $520 after it had seen a consistent drop to $460 from a value of $670 just a few days ago.

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