Ethereum (ETH) isn’t a security, at least from the perspective of William Hinman – the director of corporative finance of the United States Securities and Exchange Commission (SEC). Addressing the audience at the Yahoo All Markets Summit: Crypto conference which took place in San Francisco, Mr. Williams Hinman said that the SEC does not see so much value in treating Ethereum as a security today.
Decentralization Is Key
Hinman further explained that as a result of the fact that there is no central group or individual responsible for the development, sales, and maintenance of Ethereum, and hence “the digital currency may not be a representation of an investment contract.”
These statements are the most recent in the long line of remarks that found a lot of regulatory officials haranguing on whether the sale pattern in which the digital currency was issued subjected it to the United States securities laws.
Views such as these have been advanced greatly by previous regulators, while the Securities and Exchange Commission has spoken derogatorily and generally about its treatment of the sales of digital currencies and Initial Coin Offerings.
In pre-written remarks earlier today, William Hinman said: “based on his understanding of the current state of ETH, the Ethereum platform, as well as its decentralized structure, sales of tokens, and present offers are not securities transactions.”
Hinman also warned that the analysis of whether a digital currency or an ICO is a security isn’t static and doesn’t strictly inherent to the instrument, and that even ICOs and cryptocurrencies with utility that functions strictly as an exchange means a decentralized platform could be packaged and sold a means of investment which can be security.
Mr. Hinman also pushed back on some digital currency sales that claim to be utility assets and not security assets, saying that simply tagging a digital currency a “utility asset” doesn’t turn the digital currency into an asset that isn’t a security.