A Look at the Breaking News for Ethereum
In an important ruling from the SEC, the department declared that Ethereum is not a security. This information offers many other ICOs a guide on how to register. The SEC head did note that it is possible that the initial sale of ETC was probably as a security, but that it no longer qualifies as such.
“When we think about how ether today is operating, at least, we see a highly decentralized” network, not the type of centralized actor that characterizes securities offerings, Hinman said. “In its current state, we don’t see value regulating it.”
Joe Lubin, a co-founder of Ethereum and the founder of CosenSys, a major Ethereum application company, says he is grateful for the SEC’s decision. “We applaud the clarity provided by Director Hinman and the SEC today,” Lubin said in a statement. “Ether and other next-generation consumer utility tokens will continue evolving the web towards networks that are more fair, secure, and evenly distributed. ConsenSys looks forward to continuing to engage with regulators around the globe to promote responsible adoption of this transformative technology.”
Yet, this ruling only really tells investors that you are in fact betting on a community. Furthermore, this issue is not entirely wrapped up as many tokens run on the Ethereum network and this may be considered having an investment in ETC similar to Microsoft. Still, it is rather a stretch to believe that the SEC can gain much in regulating an ecosystem like Ethereum that is so decentralized.
Other cryptocurrencies, by Hinman’s explanation, can still be classified as securities. While a token in and of itself may not be a security, the purchaser’s expectation during a sale will determine its classification, he said. If a purchaser has a reasonable expectation of profit based on the seller’s actions, the token is likely a security.
A Washington, DC think tank, Coin Center, said that ether shouldn’t be a security because no third party is behind the virtual coin providing us with profits.
Coin Center said in a statement: “We are glad the SEC agrees with our long held analysis of how securities law applies to decentralized cryptocurrency networks like Bitcoin and Ethereum.” It added that, “With this guidance, the SEC is showing that taking a pro-innovation approach does not have to come at the expense of protecting investors.”
Of course, this news sent the price of BTC and ETC both spiking. The former practically was on life support as sellers have kept the cryptocurrency off balance.