No, SEC Chairman Did Not Say Ethereum Is Not a Security

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By Maud Guon Mar 14, 2019
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The U.S. SEC Chairman Jay Clayton did not confirm that Ethereum is not a security.

Having been in the spotlight all along, big names usually tread cautiously when it comes to cryptocurrencies, as every move they make is bound to be watched closely by the entire world.

Jay Clayton, the Chairman of the United States Securities and Exchanges Commission (SEC), has recently been caught in the middle of a fierce debate over whether Ethereum should be considered as a security.

What Did Jay Clayton Really Say in the Letter

An earlier report published by CCN on March 12 has been raising eyebrows within the crypto community. In the article headlined “SEC Chief Confirms Analysis That Ethereum Isn’t a Security,” the news outlet argued “Jay Clayton has formally confirmed existing staff analysis that Ethereum and other similar decentralized cryptocurrency assets are not securities, even if they were initially sold through an illegal securities offering.”

Suddenly, the SEC Chairman’s statement has been splashed all over the media over the past two days.

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However, much of the information circulating on the Internet has been grossly overstated.

In an official response to U.S. House Representative Ted Budd, Mr Clayton said,

“Your letter also asks whether I agree with certain statements concerning digital tokens in Director Hinman’s June 2018 speech. I agree that the analysis of whether a digital asset is offered or sold as a security is not static and does not strictly inhere to the instrument. A digital asset may be offered and sold initially as a security because it meets the definition of an investment contract, but that designation may change over time if the digital asset later is offered and sold in such a way that it will no longer meet that definition.”

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Cryptonews Hub has found that Mr Clayton only voiced his own opinion on the matter but not on behalf of the security watchdog, while making no reference to Ethereum or any other crypto asset in his statements. What Clayton really said is that he agrees the analysis of whether a digital asset is offered or sold as a security is ever-changing. That’s all.

Though the Chairman once said that Bitcoin is not a security, he has not yet stated in black and white terms that Ethereum and other cryptos should not be classified as a security.

Differences Between Being a Security and Not Being a Security

If Ethereum is classified as a security, then the listing of Ethereum and the like on U.S.-based crypto exchanges would be perfectly justifiable. The SEC previously warned that exchanges themselves might be impacted if they list illegal securities.

If Ethereum fails to be qualified as a security, however, the second largest crypto asset is able to avoid strict securities regulations from crypto exchanges.

Cryptonews Hub is an emerging blockchain media and information services company specializing in crypto assets. Its team of experts is committed to editorial independence and journalistic professionalism, providing key insights on the latest developments involving cryptocurrency regulations around the world and innovations in blockchain technology.
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