Whether or not Ether is sanctioned as a currency under US jurisdiction has been a major point of speculation and uncertainty since the SEC first began its more active stance on cryptocurrencies and ICOs. As the Ethereum platform represents one of the first major ICOs, the future of platform rested majorly on the SEC’s interpretation of it.
Just hours ago, the SEC ruled that Ether is not a security. William Hinman, head of the Division of Corporation Finance at the SEC, explained that securities are largely determined by the manner in which they are sold and the expectations that sale entails. Because Ether was distributed in a decentralized manner, and contributions were not met with expected returns, ETH, in the eyes of the SEC is not a security. “”If there is a centralized third party, along with purchasers with an expectation of a return, than [sic] it is likely a security. The key here of course being that Ether is decentralized,” said Hinman.
The market instantly responded to this news. Ether immediately reacted with a US$50 gain, from $470 to $520. It currently rests at $515 and seems poised for further growth. Among top 100 coins by market cap on Coinmarketcap, all lie in the green over the past 24 hours. While the 10% ETH climb is substantial, it is being outpaced by 40 coins among the top 100. ICON (ICX) is leading the show with a 22% climb over the past 24 hours.
To maintain SEC compliance, a number of criteria must be met, including a yearly US$1 million license fee to the SEC. As such, essentially all ICOs have elected to simply bar access to US investors or ignore the jurisdiction of the SEC. Of course, as the US is taking an increasingly active stance on crypto, most projects are starting to equate an approach of ignorance to one of suicide. Shipchain’s recent cease-and-desist exemplifies the danger in such a stance.
If Ether were to be labeled as a security, then it would stand to reason that each of the hundreds of ICOs operated through the Ethereum network, as ETH tokens or otherwise, would similarly be labeled as securities. For most ICOs, meeting SEC standards, especially with that yearly US$1 million, would be impossible. And for many that could comply, doing so may seriously cripple their project in the long term. Today’s SEC ruling has, at least for now, protected the longevity of numerous projects.