Ethereum's officially not a security — here's why it matters for other coin offerings

markets.businessinsider.com | 6/15/2018 | Staff
katz1234 (Posted by) Level 3
The Securities and Exchange Commission does not consider Ethereum a security, it said Wednesday.

Cryptocurrency developers and advocates praised the decision, saying it will help advance innovation.

Agency - Logic - Project - Security

We broke down the agency's logic to show how you can tell if a project would be considered a security.

Follow the price of Ethereum in real-time here.

Ethereum - Security

Ethereum is officially not a security.

The long-awaited decision on the world's second-largest cryptocurrency could have far-reaching implications for cryptocurrencies and companies pursuing initial coin offerings, or ICO's.

Fundraising - Creation - Ether - Understanding - State

"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," William Hinman, director of the Securities and Exchange Commission's division of corporate finance, said in a speech this week (emphasis ours).

"And, as with bitcoin, applying the disclosure regime of the federal securities laws to current transactions in Ether would seem to add little value. "

Had - Ethereum - Market - Cap - Security

Had ethereum, which now has a global market cap of roughly $50 billion, been classified as a security, it would have been subject to the SEC's investor-protection rules. Certain exchanges that facilitate trading of the cryptocurrency would also be required to register with the agency.

Instead, the SEC appeared to view ethereum and similar tokens more like it does bitcoin, which is currently classified as a commodity and falls under the auspices of the Commodity Futures Trading Commission.

Supreme - Court - Ruling - Howey - Test

Using wording from a 1949 Supreme Court ruling, the Howey test defines New York transactions as investment contracts if "a person invests his money in a common enterprise and is led to expect profits solely from the efforts of the promoter or a third party."

ICOs have been in a state of regulatory uncertainty as both developers and investors fear a securities designation...
(Excerpt) Read more at: markets.businessinsider.com
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