A senior U.S. SEC official says that the Ethereum network is sufficiently decentralized for ETH to escape a securities classification.
SEC Corporation Finance Director William Hinman said at Yahoo Finance’s All Market Summit: Crypto in San Francisco today that:
“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.”
Hinman’s argument that Ethereum is now sufficiently decentralized to disqualify it from a securities classification appears to indicate that the altcoin will be given the all-clear and not be subjected to heavy regulation by the SEC.
In May, the WSJ ran a much-discussed news report suggesting that Ethereum was in a dangerous “gray zone” in the eyes of U.S. regulators. Citing sources familiar with the matter, at the time the WSJ report highlighted ETH’s first distribution in 2014, when the foundation raised over 31,000 BTC (then worth $18.3 mln), in one of the crypto industry’s first Initial Coin Offerings (ICOs).
The ICO’s proceeds were then used to develop the Ethereum platform, raising concerns that investors who had bought into the sale – expecting the asset to rise in value – were being led to expect a profit based “on the efforts of others” –– something that would have clinched the argument for ETH being classified as a security, the sale of which would have to be registered with the SEC.
As the WSJ notes today, regulators were also reportedly analyzing whether or not the Ethereum Foundation wielded excessive influence over the value and distribution of the asset, something that would have further counted towards a security classification.
At the time of the news controversy, the Ethereum Foundation’s co-founder Joseph Lubin hit back, stressing that Ethereum’s investors “share a stake in a common