Good news for Bitcoin (BTC) and Ethereum (ETH) amid a bear market and a strong dip. The key person of the US Securities and Exchange Commission (SEC) related on cryptocurrencies and initial coin offerings (ICOs), says that Bitcoin and Ether are not securities. At the same time, he commented that ICOs are and that they will be regulated by the SEC.
Bitcoin and Ethereum are not Securities
After long time discussing whether Bitcoin and Ether were securities or not, the SEC determined that they do not enter in the category of a security.
William Hinman, head of the Division of Corporation Finance at the SEC, commented:
“Central to determining whether a security is being sold is how it is being sold and the reasonable expectations of purchases.”
According to Hunman, the primary issue to determine if a cryptocurrency and ICOs are securities or not is related to the expectation of a return by a third party, and specifically whether there was a person or group sponsoring the creation of the sale of the asset and that played an important role in its development and maintenance.
At the same time, it is important to see if the purchaser of the asset is seeking a return on the investment. If there is a centralized party, and purchasers expecting a return, then it is likely a security.
Bitcoin is not a security, according to Hinman, because the key factor is that it is decentralized. There is no centralized organization that are key determining the factor in the enterprise. Ether is also decentralized, because the network is decentralized, he commented.
At the moment there is not information about other cryptocurrencies that were analysed like Ripple (XRP).
“Over time, there may be other sufficiently decentralized networks and systems where regulating the tokens or coins that function on them as securities may not be required,” Hinman explained.
ICOs Securities or not?
It is also important to mention that Hinman said that some digital assets related to ICOs, may not be considered as securities, but instead a consumer item. For example, if the asset is purchased for personal use and not intended as an investment.
Hinman finally stated.
“There is excitement and a great deal of speculative interest around this new technology. Unfortunately, there also are cases of fraud. […] we stand prepared to provide more formal interpretive or no-action guidance about the proper characterization of a digital asset in a proposed use.”
At the moment of writing the article, most of the cryptocurrencies are being traded positively after a strong bearish action that affected the whole market. Bitcoin is being traded around $6,600 and growing 4.89% compared to 24 hours ago. Ethereum, is also growing more than 9% and it is traded around $516 dollars.
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