Ethereum is the second biggest crypto asset in the market and is best known as the second generation cryptocurrency.
Ethereum (ETH) introduced smart contract operations to the blockchain space, which placed it on the top of the chain among its crypto peers.
However, as the industry is growing, the need for regulating crypto assets appears, so the Securities and Exchange Commission is keeping a close eye to all ICOs, old and new, deciding whether these assets represent currency or a security.
Is Ethereum a security? Here is what SEC has to say on this matter.
Is Ethereum a Security? SEC Already Made Their Decision
With the booming blockchain industry there came regulations. While some countries like the Republic of China are still considering crypto assets to be dangerous to the general economy, regulating the majority of ICOs with prohibitions, there are countries that don’t necessarily share this opinion.
There are many that are; however, Securities and Exchange Commission in the US has already made their mind regarding numerous ICOs. SEC is not only working on regulating the market but is also making sure that the investors are aware that there are numerous scam coins out there, Ponzi schemes included as well.
However, Ethereum (ETH) is not one of them. In the matter of categorizing Ethereum as currency or a security, the Securities and Exchange Commission decided that Ethereum is not a security, but currency.
That decision was declared on Yahoo Finance Summit months back, in mid-June of 2018.
That means that the SEC has made the decision based on the operations on the ETH platform, concluding that the transactions being made through Ethereum ecosystem cannot be categorized as a security.
Is bitcoin a security?
Ethereum and Bitcoin are Proclaimed to Be Currencies
SEC showed that they are not caught up in some sort of “witch hunt” on cryptocurrencies and digital assets, but is more likely inclined towards protecting users and investors with regulations approved by the government.
These regulations could provide the trust the crypto assets need in order to be mass adopted, and ETH and BTC were basically the first cryptos to be officially proclaimed as a nonsecurity but rather a currency.
Both of these networks are completely decentralized and are operating as a means of transferring value, rather than as a stock, bond, or a security.
The SEC concluded their decision by stating that since there is no centralized authority within the system of Ethereum and since transactions made with ETH don’t represent a binding investment contract, Ethereum and its currency Ether cannot be viewed as a security.
Other Cryptocurrencies Still Waiting for SEC Decision
Although Ethereum and Bitcoin are already regulated as a nonsecurity, there are still many currencies that are waiting for the SEC to decide on their destinies.
One of such top crypto assets is Ripple (XRP) that has already been through three different lawsuits implying that Ripple is centralized and that the funds that the investors have placed in XRP are being used for the personal business of Ripple Labs.
All these lawsuits were deemed as allegations, being dismissed in the favor of Ripple Labs. However, XRP is still waiting for the SEC to decide whether it represents currency or a security.
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