Securities and Exchange Commission Chairman Jay Clayton has formally confirmed existing staff analysis that Ethereum and other similar decentralized cryptocurrency assets are not securities, even if they were initially sold through an illegal securities offering.
Clayton made this revelation in a letter sent to US House Rep. Ted Budd, who had requested that the SEC provide clarity on whether SEC Director of the Division of Corporate Finance William Hinman spoke for the agency when he said that Ethereum was not a security or was merely voicing his own opinion.
While Clayton did not reference Ethereum or any other cryptocurrency by name, he confirmed that he agrees with Hinman’s analysis of what crypto assets fall under the securities classification.
In a key section he writes:
“Your letter also asks whether I agree with certain statements concerning digital tokens in Director Hinman’s June 2018 speech. I agree that the analysis of whether a digital asset is offered or sold as a security is not static and does not strictly inhere to the instrument. A digital asset may be offered and sold initially as a security because it meets the definition of an investment contract, but that designation may change over time if the digital asset later is offered and sold in such a way that it will no longer meet that definition. I agree with Director Hinman’s explanation of how a digital asset transaction may no longer represent an investment contract if, for example, purchasers would no longer reasonably expect a person or group to carry out the essential managerial or entrepreneurial efforts. Under those circumstances, the digital asset may not represent an investment contract under the Howey framework.”
Read the full letter below, which was first published by crypto industry lobbying group Coin Center.
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