The SEC has declared yesterday during the Yahoo Finance summit that Ethereum is not a security within the meaning of U.S. Federal law. After the Chairman of the SEC, Jay Clayton, said last unequivocally that all by ICOs issued crypto-currencies are securities, will receive Ether a special position.
William Hinman, Director of the division of Corporation Finance at the SEC, said (freely translated):
Because of my understanding of the current state of Ether and the Ethereum network and its decentralized structure, current purchases and sales of Ether are no securities transactions.
Hinman has also suggested that other crypto-currencies could or Altcoins also has the Status of a security to lose, if the structure of the project is sufficiently decentralized. In the past few weeks, the SEC, under the leadership of Jay Clayton had declared that any ICO that you’ve ever seen, a value paper. After this statement, many experts expected that the SEC would make for Ethereum is no exception.
The Declaration of Hinman reflects now, however, our reasoning that the Ether can be no security, because there is no centralized company stands behind ETH, what gains would be achieved through the issue. Have bought in 2014, many investors ETH in the hope that the value will rise.
The success of stand in close connection with the successful development of the platform for which the investors had provided the money. However, the influence of the Ethereum Foundation, and the founder has since then significantly decreased. The exclusive edition of ETH on Mining and the Non-Profit Ethereum Foundation can be assumed that a decentralised structure.
Hinman place in this respect (freely translated):
In cases where there is no Central company, operating in the Asset invested in, or in cases where it only is sold, to digital values in the network, on which it was created, to buy, this digital Asset outside of the jurisdiction of the U.S. securities laws.
Already at the beginning of this month, the Chairman of the SEC, Jay Clayton, made a similar statement about Bitcoin, in which he stated that Bitcoin is due to its decentralized structure, no securities within the meaning of the American law. The key question for the SEC seems to be whether the value of the crypto-currency is the actions of a third party, a company dependent on the currency value. If the ICO is completed and the operation of the network is completely decentralized, it will stop the SEC, the project as the value of paper.
Hinman sees in It a Trend to go to the laws and regulatory measures out of the way (freely translated):
In order to collect money, in order to develop networks on which digital assets are operated, sell, Promoter of the crypto-currencies often, instead of selling shares, Bank notes issued, or to obtain Bank financing. In many cases, the economic substance is, however, a conventional securities offering.
After the statements by Hinman were publicly responded last night, not only the price of Ethereum, but also of the entire crypto currency market is very positive on this news. The Ethereum rate climb last night within an hour and a half from 398 to 448 euros per ETH.
The criteria of the SEC
In the Following, the SEC has published a list of questions to determine whether an ICO to a value of paper. The questionnaire we have translated freely. The Original in English can be found here.
1. There is a Person or a group that has promoted the creation and sale of the crypto-currency, whose efforts play a significant role in the development and care and its potential increase in value?
2. Has this Person or group have a participation or other interest in the crypto-currency, so that it would be motivated to make efforts in order to effect an increase in the value of the crypto currency? Would the buyer reasonably assume, that such efforts and lead to a return on your investment in the digital Asset?
3. The project sponsor has increased the amount that goes beyond what is required for the construction of a functioning network is required, and if so, has he specified how these funds can be used to support the value of the Token, or to increase the value of the company? The promoter continues to promote funds from Revenues or operations, in order to improve the functionality and / or the value of the system in which the Token work?
4. “Investment” buyers, to obtain a return? The Asset is sold to the public, instead of to potential users of the network at a price that is correlated in a reasonable way with the market value of the goods or services in the network?
5. The application of the Securities Act of protection is useful? There is a Person or an organization, to the other exit, which plays a key role in the profit of the company so that the disclosure of their activities and plans for the investors would be important? There are information asymmetries between the promoters and potential buyers / investors?
6. Practice of other people or organisations, as the promoter, management rights or significant influence from?
About the previous questions, the SEC has published questions, the ICO-organizer:
1. Is appropriate to the Token-creation, in order to meet the needs of the user or operate mainly speculation?
2. Set of independent actors, the price, or the Promoter supports the secondary market or it affects the trade otherwise?
3. It is clear that the main motivation for the acquisition of crypto-currency in the personal use or consumption and not in investment?
4. Are distributed the tokens to match the needs of the users? Can be kept the value of brands, for example, only in quantities of, or transferred, in accordance with the expected use by the buyer? There are built-in incentives to enforce the use of Tokens in the network immediately, so that the Token, they lose their value or can be kept in the token for longer periods of time for investment?
5. Marketed the Asset to potential users or the General Public and distributed?
6. Are distributed the assets to a diverse user base, or in the hands of a less concentrated can have an impact on the application?
7. The application is fully functional, or in an early stage of development?
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