Ethereum is Not a Security, ICO Security Tokens Can Become Non-Securities - SEC

[bbc.reporter]

I reckon what saved Ethereum from being classified as a security was proof of work. Yes it had an ICO, but the distribution of ETH after that was done by mining.

I am eager to know how the SEC proceeds in labeling other ICOs that use proof of stake or delegated proof of stake. I speculate that those tokens that were distributed centrally with no mining might be labeled as securities.



The token, the coin, all by itself is not a security, U.S. Securities and Exchange Commission (SEC) Director of Corporate Finance William Hinman said in a surprise announcement today.

“If the network on which the token or coin is to function is sufficiently decentralized, and the purchasers no longer have a reasonable expectation that a person or group is going to carry out a central managerial or entrepreneurial efforts, those assets might not represent an investment contract,” Hinman said before adding:

“Moreover, when the efforts of a third party are no longer key in determining the enterprise’s success, material information asymmetry recedes.

What the third party promoters know about, but investors don’t know about, if this is highly decentralized, that information asymmetry recedes.

As the network becomes more truly decentralized, the ability even to identify a promoter, or someone that could make the requisite disclosures, becomes in many cases difficult or perhaps much less meaningful…

Putting aside the fundraising that accompanied the creation of ether, based on my understanding of the present state of ether, the ethereum network, its decentralized structure, we believe current offers and sales of ether are not securities transactions.

Read in full https://www.trustnodes.com/2018/06/14/ethereum-not-security-icoed-security-tokens-can-become-non-securities-says-sec

[cryptohunter]

I reckon what saved Ethereum from being classified as a security was proof of work. Yes it had an ICO, but the distribution of ETH after that was done by mining.

I am eager to know how the SEC proceeds in labeling other ICOs that use proof of stake or delegated proof of stake. I speculate that those tokens that were distributed centrally with no mining might be labeled as securities.



The token, the coin, all by itself is not a security, U.S. Securities and Exchange Commission (SEC) Director of Corporate Finance William Hinman said in a surprise announcement today.

“If the network on which the token or coin is to function is sufficiently decentralized, and the purchasers no longer have a reasonable expectation that a person or group is going to carry out a central managerial or entrepreneurial efforts, those assets might not represent an investment contract,” Hinman said before adding:

“Moreover, when the efforts of a third party are no longer key in determining the enterprise’s success, material information asymmetry recedes.

What the third party promoters know about, but investors don’t know about, if this is highly decentralized, that information asymmetry recedes.

As the network becomes more truly decentralized, the ability even to identify a promoter, or someone that could make the requisite disclosures, becomes in many cases difficult or perhaps much less meaningful…

Putting aside the fundraising that accompanied the creation of ether, based on my understanding of the present state of ether, the ethereum network, its decentralized structure, we believe current offers and sales of ether are not securities transactions.

Read in full https://www.trustnodes.com/2018/06/14/ethereum-not-security-icoed-security-tokens-can-become-non-securities-says-sec

I'm hoping that your assumption is correct but reading what he says it seems they may be quite lax on icos perhaps a little too lax

All icos should have a 50 % pow phase minimum

[WaffleMaster]

All ICO's are securities because they are being issued by a specific entity. My guess is the FEDs are going to be less strict on Bitcoin and Ethereum because they are not issued but earned by anybody. But they'll come down had on ICO's, and hopefully they do because all this garbage on the forum and elsewhere is really annoying to have to see. ICO's in general are complete garbage.

[Crown1]

Most of the ico securities, because people only want to profit by ico, they are not used to really use the tokens, ETH not securities, however, it is obviously a good news for the ETH.

[bbc.reporter]

50% of coins held by a project's foundation is hardly decentralized. Tokens issued from an ICO should be less than 10% of the entire maximum coin cap, I reckon.

In any case, the question remains. Are cryptotokens like EOS or ADA securities under the SEC's definition?