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Ethereum Spikes after SEC Spokesperson’s declaration that Bitcoin and Ethereum are not Securities
Editorial Team

Recently, a SEC spokesman stated that Bitcoin (BTC) and Ethereum (ETH) are not securities due to their high level of decentralization. ICOs are securities and they are therefore under the regulatory purview of the SEC, instead.

At the Yahoo All Markets Summit: Crypto conference in San Francisco, William Hinman, an SEC regulatory spokesperson elaborated that the biggest in deciding whether cryptocurrencies and ICOs are securities is if there is an expectation of profits from a third party. As a result, in case investors in crypto have an expectation of profits, the asset could be classified as a security.

He said:

“Central to determining whether a security is being sold is how it is being sold and the reasonable expectations of purchasers.”

Hinman elaborated that the higher the level of centralization, the more possible the cryptocurrency to be classed as a security. He explained that Bitcoin was not a security due to its high level of decentralization, and continued adding that Ethereum was not a security for the exact same reason.

The majority of industry experts believed that Bitcoin is not a security. However, there was significant uncertainty over how the SEC would class Ethereum. As wrote, it raised $18 million in 2014 via an ICO about which many investors thought that it would be in breach of the relevant US securities laws.

The status of Ethereum as a security has long been a source of doubt for the entire Ethereum ecosystem of ICOs and DApps that rely on Ethereum due to the large number of them. According to CryptoCompare data, the market reacted instantly and strongly positive to the news. Under one hour, Ethereum has risen 10% to over $520.