The chairman of the US Securities and Exchange Commission, Jay Clayton, recently spoke on the subject of Bitcoin and cryptocurrencies as a whole in a House Committee on Appropriations meeting. He clarified that any cryptocurrencies which exclusively function as vessels of exchange should not be considered to be securities. However, this does not include ICO tokens, which on the other hand should be considered to be securities. The meeting also touched on how Ethereum should be classified.
The subcommittee meeting took place this past Thursday and included a wide variety of lawmakers. Clayton attempted to be very clear in diving cryptocurrency assets into two different groups – those that are purely mediums of exchange, such as Bitcoin, and those that are tokens used to finance projects. However, Clayton left the door open for the possibility of there being tokens that are simultaneously securities, only stating that there are ”very few”, and none that Clayton had seen, that fall into the category of being securities.
These comments echo those previously made by Clayton, and following his line of distinguishing between those cryptocurrencies mainly used as a means of payment and those of cryptocurrency tokens. Nonetheless, this stance is not entirely uncontroversial, and a group of influential Silicon Valley chiefs recently arranged a meeting with the SEC in order to sway their policy on this. If neither tokens nor pure cryptocurrencies were considered securities, it would entail different regulations and financial implications for the assets. It should be noted, however, that the SEC was reportedly not all too receptive to the Silicon Valley consortium’s ideas.
Moreover, the House Committee on Appropriations’ meeting also included a discussion on Ethereum. This is somewhat noteworthy, as many ordinary users believe that the cryptocurrency, which is the world’s second largest, is a ”pure” cryptocurrency. This would mean that it would be free from traditional securities regulations, which is not the case. This is all due to the fact that Ethereum was initially funded through a presale. The presale took place in 2014, and whilst Ethereum has been distributed through mining on the network ever since it was officially launched, the original presale means that it is regarded as a security by the SEC.
However, this has been the source of much debate. Gary Gensler, who was the chairman of the SEC’s Commodity Futures Trading Commission during the Obama administration, has reportedly indicated that Ethereum might prove more likely than, say, XRP to become exempt from securities regulations. This is mainly due to the fact that Ethereum distribution is now decentralized, whilst XPR is still being issued by the cryptocurrency company Ripple. Furthermore, Gensler argued that Ethereum should be considered a noncompliant security just days ago.
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