Will Ethereum Be Considered As A Security By The SEC?
The blockchain frenzy has attracted a lot of attention from investors and regulators alike in the past years. Just as with the internet, e-commerce and any innovative technological advancement, governments had to find ways to regulate and create a fair legislation for anyone involved. As the USA moves forward to giving cryptocurrencies a better legal stance, as of now most cryptocurrencies and ICOs are considered securities.
According to Securities and Exchange Commission (SEC) chair Jay Clayton who testified before the Senate’s Banking, Housing and Urban Affairs committee back in February claimed:
“I believe that every ICO I have seen is a security”
Ethereum is a platform to create initial coin offerings, but should the platform itself be considered a security as well? The CFTC has designated bitcoin as a commodity, can Ethereum be considered a commodity or utility?
Why Ethereum is not a security.
Lawyers and representatives from venture capital companies Andreessen Horowitz and Union Square Ventures have joined powers to create the Venture Capital Working Group. This new liaison seeks to petition federal authorities to see certain virtual currencies in a “different light.”
According to reports, the venture capital group made a plea for the agency to provide “safe harbor” to certain cryptocurrencies. It argued that Ethereum “has become so decentralized that it should not be deemed a security.”
According to American laws, the SEC has all the indications to consider Ethereum as a security. This liaison seeks to prove that with full decentralization the token no longer controls the network. Their goal is for the SEC to consider Ethereum more of a utility rather than security investment.
According to FINMA, Utility tokens are tokens which are intended to provide digital access to an application or service.
Both VCs are heavily invested in the cryptocurrency sector. Andersen and Horowitz have invested in Coinbase as early as their series B as well as many ICOs such as DFINITY, Ripple, Harbor amongst other projects.
If The liaison is able to come up with a proposal to the SEC that Ethereum is indeed a utility investment which other cryptocurrencies do you think can fall under the same ruling?