The US Securities and Exchange Commission’s Chairman Jay Clayton has reaffirmed the regulator’s stance on the classification of Ethereum and other similar cryptocurrencies, clarifying that such digital assets are not deemed as securities according to US laws, non-profit research and advocacy group Coin Center reported March 12.
As Coin Center cited in a letter authored by Clayton, based on the SEC staff’s analysis, Ethereum, and other digital currencies like it, are not securities.
In September, Coin Center has co-authored a letter with U.S. representative Ted Budd addressed to Clayton, asking whether or not he concurs with William Hinman’s approach to Ethereum. As the SEC corporate finance director stated in June 2018, “in its present state,” Ethereum will not be regulated as securities as opposed to how it was previously classified during its initial coin offering.
Clayton responded on March 7, indicating that the definition of digital assets can change over time as it is “not static.”
Furthermore, Clayton explained that a digital asset that has been initially classified as a security can be reclassified over time “if the digital asset later is offered and sold in such a way that it will no longer meet that definition.” While the SEC chairman did not specifically pertain to Ethereum, he noted that he had been asked whether or not he agrees “with certain statements concerning digital tokens in Director Hinman’s June 2018 speech,” to which he responded with a description of how asset’s classification could be changed.
As Clayton stated:
“I agree with Director Hinman’s explanation of how a digital asset transaction may no longer represent an investment contract [a security] if, for example, purchasers would no longer reasonably expect a person or group to carry out the essential managerial or entrepreneurial efforts.”
In December 2018, Clayton also noted that while ICOs “can be effective,” “securities laws must be followed.” Earlier this month, SEC commissioner Hester Peirce also argued in favor of allowing crypto firms to self-regulate when possible.