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SEC Official: Ether Is Not A Security

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By Nikhilesh De

Ethereum is not a security, says U.S. Securities and Exchange Commission (SEC) director of corporate finance William Hinman.

Speaking at the Yahoo! All Markets Summit: Crypto event in San Francisco Thursday, the official told the audience that “We don’t see a lot of value in treating ether today as a security,” explaining that the fact that there is no central figure or group responsible for ethereum, and therefore “the assets may not represent an investment contract.”

In pre-written remarks, he said:

“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.”

Hinman added that similarly, bitcoin is not a security due to the nature of its network.

That being said, Hinman cautioned that “the analysis of whether something is a security is not static and does not strictly inherent to the instrument,” and that “even digital assets with utility that function solely as a means of exchange in a decentralized network could be packaged and sold as an investment strategy that can be a security.”

He also pushed back on token sales which claim to be utility tokens and not security tokens, saying “Let me emphasize an earlier point: simply labeling a digital asset a ‘utility token’ does not turn the asset into something that is not a security.”

William Hinman image via Yahoo! / YouTube

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