Bitcoin and Ether Aren't Securities According to the SEC

Good news for Bitcoin and Ether, bad news for other ICOs.

Morgan Shaver
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It’s official, Jay Clayton, chairman of the Securities and Exchange Commission (SEC), ruled that Bitcoin and Ethereum are not securities. Had the SEC ruled differently, exchanges and markets of the aforementioned cryptocurrencies could have wound up facing strict regulation. Following the ruling, both Bitcoin and Ether have spiked in price which is undoubtedly good news for anyone who invests in the currency.

Alternatively, there are numerous ICOs that are still viewed as securities in the eyes of the SEC. According to William Hinman, Director of the Division of Corporation Finance, many ICOs are on the receiving end of SEC regulatory action. He also noted that calling a currency a “coin” or a “token” makes no difference to the SEC. Instead, it’s the extent of decentralization involved in the network that’s subject to scrutiny.

“Over time, there may be other sufficiently decentralized networks and systems where regulating the tokens or coins that function on them as securities may not be required,” stated Hinman in an interview with CNBC. It may be worth beefing up your blockchain project’s decentralized attributes, otherwise your project may end up subject to the SEC’s judgement.