Recently, William Hinman Director, Division of Corporation Finance at SEC, delivered a speech at the Yahoo Finance All Markets Summit and made it clear that Bitcoin and Ethereum are not considered as securities under the laws of the US, as they do not benefit a single organization or a company.
“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. And, as with Bitcoin, applying the disclosure regime of the federal securities laws to current transactions in Ether would seem to add little value,” Hinman explained.
“In case of Ether as we interact with market participants, we keep gathering info and at some point we say this is something we should make clearer,” he added.
He also pushed back on the idea that there can be utility tokens which are not securities, saying “even digital assets with utility that function solely as a means of exchange in a decentralized network could be packaged and sold as an investment strategy that can be a security.”
Hinman also pointed out that the SEC is willing to work with token projects and their legal counsel to establish whether a project should register with the regulator.
Immediately after the speech of Hinman was released, the price of Bitcoin and Ethereum spiked. In the past 24 hours, the cryptocurrency market has rebounded, according to data from Coinmarketcap. Bitcoin has raised by 1,26% and its current price is $6 614, Ethereum has made a 2,58% gain and makes up $501,41 per coin at the time of writing.
The speech of Hinman was specifically noteworthy and important as it was the first case in which an official from the SEC provide clarity on the nature of Bitcoin and Ethereum in a public statement. Moreover, the statement of the SEC has brought a short-term stability to the market, which could play a key role in the mid-term price movement of both Bitcoin and Ethereum.
As some analysts believe, the SEC has offered clarity on the two cryptocurrencies in order to prevent the crypto industry and blockchain sector of the US from falling behind other leading markets.
Last week, SEC Chair Jay Clayton stated that he believes Bitcoin (BTC) is also not a security, as it acts as a replacement for sovereign currencies, while ICOs can be considered as securities. Unlike Ethereum, Ripple, and virtually all ICO tokens, the assumption that Bitcoin should be regulated as a security has never gained much traction, given that the cryptocurrency has been mined since its inception.