At press time, Ethereum is trading for roughly $516. This is about $50 (just over nine percent) higher than where it stood during yesterday’s afternoon hours, and thus marks a significant turn for the currency. After several days of experiencing a downward spiral, Ethereum appears to be back on track, and is pulling itself out of the doldrums.
Things may yet change even further in the comings weeks now that the Securities and Exchange Commission (SEC) has changed its position on the bitcoin competitor. After weeks of speculating whether ether would classify as a security due its early days as a presale (now ICO) coin, director of corporate finance William Hinman told audiences at the Yahoo Finance All Market Summit in San Francisco that both bitcoin and ether do not classify as securities due to their decentralized natures, and thus cannot be regulated by SEC guidelines.
“Putting aside the fundraising that accompanied the creation of ether, 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,” he commented to an enthusiastic crowd.
The primary concern was that Ethereum, in garnering a securities classification, would incur massive price drops due to newfound scrutiny from the government body. The news has led to positivity in the cryptocurrency space, with many commenting that the SEC has made the right decision.
“If we are not subject to securities rules with respect to [ether], it paves the way for the use of smart contracts to settle securities token transactions,” explains Jim Dowd, founder and CEO of North Capital. “It also provides some guidance on how we should be viewing [bitcoin and ether] as regulated entities that are in the business of securities dealing.”
Dowd continued by adding, “These comments provide a pathway for other decentralized cryptocurrencies or crypto utility tokens whose attributes are like [bitcoin or ether] – to establish that they are not securities, based on the facts and circumstances. The SEC has always said that whether a digital asset is a security depends on the facts and circumstances, but there has never been a dispositive set of facts and circumstances to reference.”
People are also praising Hinman for being particularly straightforward about the subject and for directly addressing the concerns of traders. Jay Clayton, the SEC chairman, has not always been clear regarding the organization’s plans or which currencies it sought to single out.
During an interview with CNBC just last week, Clayton refused to speculate on which assets would and would not classify as securities, saying, “I am not going to comment on specific crypto assets.”
Still, however, it appears the answer is finally set in stone, and both investors and traders are extremely happy with the outcome. Jerry Brito – executive director of the trade group Coin Center – applauded Hinman’s decision, stating:
“With this guidance, the SEC is showing that taking a pro-innovation approach does not have to come at the expense of protecting investors.”
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