SEC official: bitcoin, ether not securities

14 Jun, 2018
by Salahuddin Uqaili
News
SEC official: bitcoin, ether not securities

The head of the Division of Corporate Finance at the US Securities and Exchange Commission has stated that while most ICOs are securities, some such as bitcoin and ether are not.

According to a report by the CNBC, William Hinman outlined the rationale behind his viewpoint in San Francisco during the  Yahoo All Markets Summit: Crypto conference. He posited that "Central to determining whether a security is being sold is how it is being sold and the reasonable expectations of purchasers." Key to this definition is the existence of any third party trader who expects a return of transactions carried out on an asset.

The decentralised nature of the Bitcoin and Ethereum networks mean that bitcoins and ether should not be defined as securities as no single party can impact the cryptocurrency as a whole. However, Hinman stated that other cryptocurrencies may not fulfill such a criteria for decentralisation but did not put forward any examples, simply stating that many ICOs are currently operating in ways which make them securities. He stated that he wanted to help better define the legal characteristics for future ICOs, saying that his team is "... prepared to provide more formal interpretive or no-action guidance about the proper characterization of a digital asset in a proposed use."

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