SEC and CFTC will today decide if Ethereum deserves prohibition

Observers expect to see the decision of the United States Commodity Futures Trading Commission (CFTC) made jointly with the Securities and Exchange Commission (SEC) today on 7 May 2018. Because the meeting is held in America, for the European market this might mean that the announcement about the status of Ethereum would be published at night.

One of the most visible complaints made by regulators is the questionable nature of Ethereum tokens in connection to the Howey test: originating from the old 1946 judicial precedent, this practice deems the terms of a transaction unfair if one of the parties has advantageous influence over it. When Ethereum tokens are bought, the money is being invested in the common enterprise with expectations of further revenue thanks to third parties, some officials note. All this adheres to the four criteria of the test.

Joseph Lubin, one of the high-ranking leaders of the Ethereum Foundation, has once again reiterated that ETH digital tokens were not securities and expressed hope that regulators understand this as well.

Regardless of the turn of events, the price of Ethereum will be seriously affected by the result of the meeting and the following decision. Other countries with similar laws on securities may easily use the decision as an example of the world practice.

Image courtesy of M. Radzinschi / ALM