SEC Chairman Says Cryptocurrencies Like Ethereum Are Not Securities
The chairman of the US Securities and Exchange Commission (SEC), Jay Clayton, expressed the opinion that the second most important Ethereum cryptocurrency capitalization most likely cannot qualify as security.
Back in June of last year, the head of the SEC Corporate Finance Department, William Hinman, expressed the opinion that Ethereum does not contain the properties inherent insecurities:
- “If we leave aside the fundraising, which was organized to launch Ethereum, the network of this cryptocurrency, its decentralized structure, current offers and sales of ETH do not constitute securities transactions. As with Bitcoin, applying securities law to Ethereum doesn’t seem to bring many benefits.”
Sometime later, Congressman Ted Budd and Coin Center’s bitcoin and blockchain industry advocacy and advocacy organization sent a letter to Clayton asking him to clarify the official position of the agency regarding Hinman’s comments.
The SEC has only now published a response to this letter, which states that “the status of a digital asset as security cannot be static” and, therefore, can change over time.
The Commission notes that a cryptocurrency can be sold as security immediately after issuance, meeting the definition of an investment contract. However, after a while, the digital asset may be sold or offered to other users no longer as an investment object.
Clayton added the following:
- “I agree with Director Hinman’s explanation of how a digital asset transaction may no longer represent an investment contract if, for example, purchasers would no longer reasonably expect a person or group to carry out the essential managerial or entrepreneurial efforts. Under those circumstances, the digital asset may not represent an investment contract under the Howey framework.”
Last summer, Jay Clayton said that Bitcoin cannot be attributed to the category of securities.