SAN FRANCISCO. At a recent event SEC Director William Hinman discusses why he does not think Ethereum and Bitcoin are Securities. The primary reason is there is no central person responsible for either, and thus not an entity that is issuing anything. In his own words:
“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(...) When I look at Bitcoin today, I do not see a central third party whose efforts are a key determining factor in the enterprise.”
This is a major step forward for the utility-based mentality of blockchain, and the future of technological innovation. If BTC and ETH were deemed securities, that would greatly stymie innovation on either platform. As both Ether and Bitcoin have been rather sluggish lately, this serves as a nice dose of optimism for the future of decentralized cryptographic ledgers.
With that said, Hinman (and the SEC's) position is that the status of a particular cryptocurrency, or token, or digital asset, is fluid, and can change. In other words, they reserve the right to come in at any point if they deem necessary. What entities managing said information packets (items, coins, tokens, etc), should take away from this meeting is that the more decentralized a currency is, and the less it seems to indicate a "promise of returns", the less likely it is to be construed as a security.
Joseph Voelbel is a blockchain researcher. You can follow him on Twitter.
*Not Financial or Legal Advice.
