Ether (ETH) Is Not a Security, Now What?

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U.S. Securities and Exchange Commission (SEC) director of corporate finance William Hinman finally answers a question that has been weighing on the minds of crypto investors for a while now. Is Ether (ETH) a security? Apparently, the answer is no.

Speaking at the Yahoo Finance All Markets Summit Hinman stated that the SEC sees, "no value in treating Ether (ETH) like a security", further clarifying that other tokens running on the Ethereum network may be subject to SEC security laws. "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." Largely this can be attributed to the fact that ETH is the "gas" that powers the Ethereum network and there is no third party promoting an expectation of profit. That plainly designates it as a commodity.

The SEC has been very aware that this question has been eating away at Ethereum Network users for some time now and acknowledged this saying, "In the case of Ether (ETH) as we interact with market participants, we keep gathering info and at some point we say this is something we should make clearer."

The Enterprise Ethereum Alliance could also be a factor in this decision and announcement. Now that over 80 firms have signed up to develop applications on Ethereum's blockchain it is hard to deny its place in the future and its utility as a development platform. Toyota (NYSE:TM), JP Morgan (NYSE:JPM), and Microsoft (NASDAQ:MSFT) is just a sampling of the companies implementing smart contracts using the Ethereum Network.

Now What?

The matter is now clear on Ether (ETH) but questions remain about other cryptocurrencies. Bitcoin (BTC) was designated a commodity in 2017 but others, like Ripple's coin XRP, for example, is still subject to a lawsuit to establish it's status as a security. It's CEO vehemently declared it is, "absolutely not a security", but critics point to it's inherent traits as saying otherwise. In any case, it will be some time before there are answers on XRP and other coins struggling to find a clear designation. At the summit, Hinman said, "We don't want to react too quickly," adding, "we do want to protect investors but not stifle innovation." Which is being seen as a good endorsement for cryptocurrency overall even if it isn't explicitly stated.

The SEC acknowledges the crypto market as an emerging and real market space that won't be going away. In the case of Ethereum (ETH) this is particularly strong with a present and responsive creator, many Fortune 500 companies signing on to build applications, and developer collectives continually working on the protocol to make improvements. ETH quickly reacted to the news as soon as it came out making a move from a low around 460 USD surging to 520 USD within moments, as a possible catalyst for a reversal further breakouts could come in the near future.

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Disclosure:

I have received no additional compensation other than the Ethereum that Hade Technologies pays to produce Exclusive content

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