“Ether not a security” investment groups plead

The CC Forums

Admin
Staff member
This would probably have some implications for ICO’s I would imagine.

From CCN. https://www.ccn.com/vcs-ask-regulators-not-to-classify-ethereum-as-a-security-nyt-report/


csGmI6S.jpg


A trade group representing venture capital firms that invest in cryptocurrencies has requested that US securities regulators provide formal assurance that ether, the native currency of the Ethereum platform, is not a security.

As CCN reported, the “Venture Capital Working Group” — comprised primarily of lawyers and representatives from Silicon Valley venture firms Andreessen Horowitz and Union Square Ventures — met with top officials at the Securities and Exchange Commission (SEC) in late March to make a plea for the agency to provide safe harbor to certain cryptoassets.

Initial reports about the meeting implied that the discussions had centered on initial coin offering (ICO) tokens, which have exploded in popularity over the past two years.

However, Nathaniel Popper of the New York Times reports that Ethereum, the second-largest cryptocurrency, was also on the agenda.

As longtime readers will remember, Ethereum was bootstrapped prior to its launch through an ICO-style presale, in which the project’s founders raised approximately $18 million in Bitcoin and contributors received ether once the network — which now distributes new coins through mining — launched in July 2015.

According to the report, the Venture Capital Working Group’s proposal argued that Ethereum “has become so decentralized that it should not be deemed a security,” even though it bears many of the hallmarks of a security under US law.

Indeed, the proposal argued that the SEC should take decentralization into account when determining whether a token is a security, arguing that tokens should not be considered securities if they achieve “full functionality” or “full decentralization,” which occurs “when the token creator no longer has control of the network based on its ability to make unilateral changes to the functionality of the tokens.”

Sources familiar with the meetings have said that the SEC was not overly-amenable to the proposal, which would give tokens a broad exemption from the agency’s purview. However, it remains unclear whether the SEC will distinguish between projects that have launched recently and ones that have been functional for several years, as is the case with Ethereum.
 

CryptoTC

Crypto Fat Cat
Voting rights? No
Revenue sharing or dividends? No
Ownership stake in a company? No

It would seem to be straightforward to me. But when has government ever acted in a simple straightforward manner?

Right, never.
 

The CC Forums

Admin
Staff member
Looks like this will be a hot debate topic in the near term.

Everything Ex-CFTC Chair Gary Gensler Said About Cryptos Being Securities - CoinDesk

“What ripple and ether, while I think there's a strong case particularly for ripple or XRP given the centrality and the common enterprise around Ripple Labs, and that they're selling it every month and so forth. That's really a discussion between them and the SEC and ultimately the way I would think is if the SEC declares that there're securities that might end up in court, and so it won't be the SEC it maybe not even a federal district court but an appellate court, that will decide or the Supremes.

But let me say this, if they decide that they're not securities, I think that too probably ends up in court and the reason is is because somebody else will say, 'well why are they getting out of regulation and I'm not.' So, law is best when applied consistently and we went through the duck test and the Howey Test - a little humorous - but it's also because for whichever way authorities go they have to have an eye on consistency as well.

So, I think nine months at the least, maybe two to five years at the longest.”


Counter No, ether is not a security. | Coin Center

“Securities are legal relationships between issuers and investors. Securities are not the paper on which a contract or other legal relationship is printed; nor are securities the spreadsheet entries that demark fractional ownership of a business; nor are securities any of the ones and zeros the arrangement of which may represent the terms of the deal. Nor are securities the assets that are derived from an investment deal: just because Apple uses invested money to build iPhones doesn’t mean that the iPhones are securities.

And, no, a useful decentralized token itself, like ether, is not a security, regardless of how it was originally sold or how funds were originally raised to build it. Again, a security is the contractual relationship between issuer and investor, nothing more. With that out of the way, what about the contractractual relationships that surrounded ether’s original development and distribution and what about that relationship today?”
 

Old Man Crypto

Expert chainblocker
Governments might need to create new classifications for cryptos or create entirely new models for regulation and taxation. They’d better not have too heavy hand or they’ll regulate things out of existence though.

Neither a security or a currency. New class of asset entirely. Try to keep up with progress US Senate and House. BS to classify a coin as a security if you don’t own part of a company. Has anyone ever bought a product with their AT&T stock shares? Has anyone with XRP ever voted on running the company? No to both, they’re different. Maybe be creative and reasonable for once?

Ehh...probably not.
 

The CC Forums

Admin
Staff member
Well the big news today was that there was no news. There is no impending decision of the status of ether, no big announcement coming soon. Hearings started today, and the topic will be on the agenda. But some feel that it could take 1-2 years to sort out the exact treatment of ether and other cryptos.

The market reacted to this non-event with a definite “meh” however, with no big gain after Sunday’s drop. More of the same basically.
 

CryptoTC

Crypto Fat Cat
Well the big news today was that there was no news. There is no impending decision of the status of ether, no big announcement coming soon. Hearings started today, and the topic will be on the agenda. But some feel that it could take 1-2 years to sort out the exact treatment of ether and other cryptos.

The market reacted to this non-event with a definite “meh” however, with no big gain after Sunday’s drop. More of the same basically.

Uh...the hearings start tomorrow. Although it doesn’t look like there’s any discussion planned regarding Ethereum as a security.

From Coindesk

What to Expect When Congress Talks Blockchain Tomorrow - CoinDesk

“A pair of Congressional subcommittees will continue their fact-finding mission on blockchain during a hearing tomorrow.

Tomorrow's session will be more narrowly focused compared to a similar hearing held by the House Committee on Science, Space and Technology's Research and Technology and Oversight Subcommittees in February.

While that event cast a broad net - covering blockchain applications beyond the realm of cryptocurrencies - the one on Tuesday will hone in on the tech's use in supply chain management.

A representative for Lamar Smith, the chairman of the House Science Committee, told CoinDesk that the hearing will host "experts in intellectual property, cybersecurity, as well as shipping and logistics."
 
Top