SEC Says Ether Isn’t a Security But Some ICOs May Be: Which ICOs Are Free?


According to reports, a senior SEC officer has claimed that the SEC isn’t necessarily opposed to Initial Coin Offerings and that the commission would not touch good crypto start-ups raising funds legitimately following the securities commission’s declaration of Ether and Bitcoin as non-securities. William Hinman, the SEC’s director of the division of corporate finance, made the above remarks. The official also defined what could classify as a security.

When Can a Token Be Classified as Securities?

Hinman said Ethereum’s decentralized structure, sales of the token and its current offers are not securities transactions. As is the case with Bitcoin, hence applying the disclosure directive of the federal securities law to the current transactions in both Bitcoin and Ether would add only little value.”

However, as what can make you a token a security, Hinman insisted that the guidelines could differ for coins generated solely to trade goods and services via a network or in scenarios where a centralized entity does not exist. According to him, platforms that aren’t 100% decentralized or those that operate to fulfill the interest of their parent organizations could be required to produce financial reports, allow their coins to be traded and stay in line with all regulations related to the art of corporate fund-raising.

Hinman also indicated that banks have started developing software and selling them or utilizing these forums to advertise their services and products. This move is making entities operate like tech firms with ad-supported revenue tech. Users are becoming increasingly upset about the fact that their information are with banks, even if the data remains anonymous. They are concerned that this could reveal information about them to unwanted parties.

In Hinman’s words:

“It is a sensitive topic in an era when banks are exploring new strings of data products. Some bankers insist that hedge funds have inquired about the possibility of seeing a stream of aggregated data, like what notes most read, or the longest read. That their banks were not selling that information, according to individuals familiar with those requests.”


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