Leading specialist, SEC (the Commission on securities and stock exchanges of the USA) on cryptocurrency and initial coin offerings (ICO) has said that Bitcoin and Ethereum are not securities, however, many (but not all) of the ICO are, subject to the relevant laws and belong to the area of responsibility of the SEC.
“The key point is that, as was the sale of an asset, and the reasonable expectations of its customers,” said William Hinman, head of corporate Finance of the SEC, in his speech on Yahoo All Markets Summit, cryptocephalinae held in San Francisco.
The Hinman said that the main problem in determining whether cryptocurrency ICO’s securities, was the expectation of profit by a third party, especially if it was a person or group of persons who sponsored the creation and sale of an asset and which played a significant role in its development and maintenance. For buyers of the asset, the key issue is whether the purpose of purchase receive income from investments.
“If, along with buyers who are waiting for profit, there is a third centralized party, it is likely that the asset is a security,” said Hinman.
However, Hinman also cited several examples when scriptactive will not be recognized by securities and will not be the responsibility of the SEC.
The key word is decentralization
Hinman, quite clearly said that Bitcoin is not a security, because it is decentralized: there is no such Central part, whose efforts are a determining factor in the profitability of the asset. In addition, for the same reason – due to the decentralization Ethereum – ether also should not be considered securities.
Hinman, did not comment on the status of other cryptocurrencies – in particular, Ripple (XRP), which was filed a lawsuit on violation of securities legislation – noting only that: “Over time may be other sufficiently decentralized networks and systems, in respect of tokens which regulate them as securities may not be required”.
In relation to ICO, Hinman also acknowledged that some digital assets can be built more as a consumer product, rather than as securities, particularly if the asset is purchased by customers for personal use and not intended for investment. He apparently meant that such type of sentences as investing in a book club or a membership at the Golf club probably should not be considered securities.
In defense of the strict interpretation of securities laws, demonstrated to the SEC, Hinman noted that “against this technology, there is an extremely great enthusiasm and speculative interest. Unfortunately, there are many cases of fraud.”
Hinman, admitted that some confusion in regard to how to determine whether these or other cryptocurrency ICO’s securities may continue to be maintained and that his office is ready to help in resolving such questions: “We are ready to provide a more formal definition or guidance for the proper characterization of digital assets on the basis of their proposed use”.