Ethereum Is Not A Security In Its Current State, According To Senior U.S RegulatorJune 15, 2018
A high-ranking officer from the Securities and Exchange Commission of the U.S stated that the alternative leader currency, Ethereum (ETH), wouldn’t be regulated as value, according to the Wall Street Journal on June 14th.
The SEC Director of Finance, William Hinman, said that, from his understanding on the current state of Ether, the overall network, and its structure, the present offers, and trades with Ether aren’t valued transactions.
This was said at the Yahoo Finance’s All Market Summit.
Hinman’s point that the Ethereum project is decentralized enough to be disqualified, as the value seems to indicate that the Cryptocurrency will be safe from being subjected by strong regulations on behalf of the SEC.
In May, the WSJ published a controversial news report where it was suggested that Ethereum was in a risky gray area when it came to regulators in the U.S. The report highlighted the ETH ICO in 2014, in which the foundation raised 31,000 BTC. The funds were used to develop the Ethereum platform, which created fear that the investors who participated hoping a value increase were looking to profit off “other people’s efforts”, which is what made possible the classification of ETH as value.
As the WSJ points out today, regulators were analyzing the possibility that the Ethereum Foundation excessively influenced the worth and distribution of the coin, which would have counted more towards the value classification.
By the time the controversial news came out, the co-founder of the Ethereum Foundation, Joseph Lubin, replied by stating that investors had a part in a “common company” and that their return on investment was a way to motivate the contribution of resources towards managing the platform.
Today’s news also alleviates the fear following the April declarations by Gary Gensler, an influential ex-regulator, who said that there was a strong argument towards Ethereum not complying with the U.S laws (such as not being registered in the SEC).
At the moment, Aya Muyaguchi, the director of the Ethereum Foundation, responded to said comments by stating that the foundation had neither the control nor the capacity to issue Ether and that the amount of Ether held by the foundation – which is less than 1% of the overall volume – is already lower than many investors in the ecosystem.
It is worth pointing out that Gensler, just like Hinman, did take into consideration the fact that the ETH mining is an important factor against it being considered as value.
Last week, the SEC president, Jay Clayton, said that he thinks Bitcoin is not a value either since it stands as a replacement for traditional coins. When the report was released, ETH was priced at $515, which marks an 8% increase after a dramatic downtrend.
Due to the decentralized and anarchic origins and principles of Cryptocurrencies, governments haven’t been able to reach a consensus on how they stand when it comes to regulation and legality.