SEC Chairman Jay Clayton Agrees That Certain Cryptocurrencies Are Not Securities
It seems the SEC chairman Jay Clayton agrees with the agency’s head of the Division of Corporate Finance, William Hinman. Last July, news.Bitcoin.com reported on Hinman’s opinion that that cryptocurrencies like BTC and ETH are not securities. “If the network on which the token or coin is to function is sufficiently decentralized” then the currency is likely not a security explained Hinman during the Yahoo All Markets Summit. So a few months ago, the blockchain legislative advocacy group Coincenter sent a letter co-signed by representative Ted Budd that asked the SEC chairman if he agreed with Hinman’s valuation.
“I agree with Director Hinman’s explanation of how a digital asset transaction may no longer represent an investment contract,” Clayton’s response read.
The SEC chairman’s letter continued:
If, for example, purchasers would no longer reasonably expect a person or group to carry out the essential managerial or entrepreneurial efforts. Under those circumstances, the digital asset may not represent an investment contract under the Howey framework.
Clayton Has Given His Opinion Before
Clayton didn’t mention which specific cryptocurrencies met this criterion, but Coincenter’s published blog post suggests that the letter is a confirmation that “Ethereum (and cryptos like it) are not securities.” Coincenter’s founder Jerry Brito thanked Budd for helping reach out to the SEC chairman. “Thanks to representative Ted Budd for his leadership getting regulatory clarity for cryptocurrencies,” Brito tweeted on Monday.
Clayton’s statements to Coincenter and representative Budd echo prior statements he made in June 2018 during an interview with CNBC. During that conversation, the chairman spoke specifically about bitcoin.
“Replace the dollar, the yen, the euro with bitcoin — That type of currency is not a security,” Clayton stated at the time. “Where I give you my money and you go off and make a venture […] and in return for me giving you my money, you say, ‘You know what, I’m going to give you a return.’ That is a security, and we regulate that. We regulate the offering of that security, and we regulate the trading of that security.”