SEC Declares Bitcoin and Ether are not Securities

SEC Declares Bitcoin and Ether are not Securities

It has been one of the outstanding questions in the crypto-currency universe and how cryptocurrencies in general are handled by regulatory authorities in the US.

And today, a high-ranking representative of the SEC has made what is considered to be the most definitive statement on the subject by the US regulatory authority: Ether and Bitcoin are not considered securities. 

Implications

The announcement, made by the U.S. Securities and Exchange Commission Director of Corporate Finance William Hinman at the All Market Summit conference today in San Francisco, essentially means that the SEC sees cryptocurrencies as falling into one of two baskets: “coins” or “tokens”.

The former will, from a regulatory point-of-view, be considered similarly to traditional commodities like gold or oil. In the case of the latter, tokens – which have some form of “managerial stewardship” – will continue to be considered by the SEC as falling into the securities category and therefore subject to its own jurisdiction.

Interestingly, Hinman’s comment also appears to imply acknowledgement that a cryptocurrency can evolve from one to the other over the course of its life-cycle.

According to some analysts, had the SEC adopted the position of viewing ETH as a security, a large-scale market sell off would likely have ensued.