SEC Executive: Bitcoin and Ether Are Not Securities

Investing, News, Regulation | June 14, 2018 By:

A key executive at the US Securities and Exchange Commission said today that bitcoin and ether are not securities, but that many, but not all, ICOs are securities.

By determining which ICOs are securities, they would come under the SEC’s regulations.

“Central to determining whether a security is being sold is how it is being sold and the reasonable expectations of purchasers,” said William Hinman, head of the Division of Corporation Finance at the SEC. Hinman made the comments in a speech at the Yahoo All Markets Summit: Crypto conference in San Francisco.

The primary issue in determining whether cryptocurrencies and ICOs were securities was the expectation of a return by a third party, Hinman said. For those who purchase the asset, the key is whether they are seeking a return on the investment.

If there is a centralized third party, along with purchasers with an expectation of a return, then it is likely a security, Hinman said. But Hinman also provided examples where assets would not be considered securities and would not come under the purview of the SEC.

Bitcoin, for example, is not a security because it is decentralized. Ether is also not a security for the same reason.

The talk by Hinman focused on the two top coins by market cap and did not comment on Ripple or other coins.

CBOE Global Markets  President Chris Concannon said the Hinman’s speech provided clarity on ether futures.

“This announcement clears a key stumbling block for tther futures,the case for which we’ve been considering since we launched the first bitcoin futures in December 2017.”

CoinList co-founder and President Andy Bromberg called today’s remarks “a validation” that the SEC that it doesn’t consider ether or bitcoin a security:

“The SEC’s recent comments are a validation of the possibility of non-securities tokens and a big step towards more definitive guidance on how and when individual tokens can be defined as non-securities,” said Bromberg. “The precedent they are indicating here is a powerful one that will enable new projects to continue to flourish in the space.”