Some of the Clouds Above Cryptocurrency Have Started to Blow Over
A dark cloud hanging over cryptocurrency investors may have blown over Thursday after the Securities and Exchange Commission (SEC) ruled that Ethereum (ETH) is not a security.
Currently, Ethereum is trading at 513.42, -6.41, or -1.2331%, as of 4:48a BST, the market is open.
Thursday in prepared remarks from SEC Director of Corporate Finance William Hinman at the Yahoo Finance All Market Summit: Crypto, Me. Hinman said:
“Putting aside the fundraising that accompanied the creation of Ether, 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.”
Ethereum wasn’t alone in its rise.
In total, the market capitalization of all cryptocurrencies tracked by CoinMarketCap rose by $18-B on Mr. Hinman’s comments.
— Live Trading News (@Livetradingnews) June 6, 2018
Currently, Bitcoin is trading at 6,619.70, -23.92, or -0.36%, as of 4:50a BST, the market is open
In the past investors had been put into a cautious state following reports in May that regulators were debating whether the asset, the world’s 2nd-largest cryptocurrency by market capitalization, could be considered an equity.
And before that, the crypto space was shaken by comments in April by SEC boss Jay Clayton that he believed “every ICO I’ve seen is a security.”
Bitcoin buyers were offered some consolation, with Mr. Clayton noting that he did not consider Bitcoin an equity offering.
Mr. Hinman explained his rationale about Ethereum this way:
“Because the Ethereum network is “sufficiently decentralized,” no single party is expected to make managerial decisions about the enterprise. And since decision-making is spread out, no single party or person will receive Key information that could be used to an unfair advantage for example, to conduct insider trading.
— GBITX (@GBIT_X) June 6, 2018
“As a network becomes truly decentralized, the ability to identify an issuer or promoter to make the requisite disclosures becomes difficult, and less meaningful. As with Bitcoin, applying the disclosure regime of the federal securities laws to current transactions in Ether would seem to add little value. ”
Though he also emphasize that while Ethereum is not classified as a security now, the classification is “not static,” aka ‘subject to change.
Have a terrific weekend.