SEC Corporate Finance head William Hinman: Bitcoin and Ethereum not securities

The U.S. SEC’s Director of Corporate Finance William Hinman has announced that Bitcoin and Ethereum would not be viewed as securities, which is a major step forward for the legal status of the latter cryptocurrency.

While there have already been some indications that Bitcoin would be viewed as a commodity due to its popular status, the issue of Ethereum has been much more vague and surrounded with unverified rumors.

Additionally, William Hinman made it clear that while some digital currencies can be viewed as commodities, the main factor will always be not the form of the product, but its substance. In other words, entrepreneurs should call things by their proper names, and even if they don’t, the law enforcement is still going to find out about this.

Another very important statement from the same speech at All Market Summit yesterday: if a digital currency is no longer issued by a central firm and if the new coin holders do not expect to share profits with this firm, this is not a security. This gives decentralized digital currencies more room to grow than to those coins which are managed and issued by a central firm.

Jay Clayton, Chairman of the U.S. Securities and Exchange Commission, has previously noted that not all tokens could be regarded as securities, as sometimes they are made for utility purposes. More on this division can be read in a separate material.

Image: TNW