Ethereum is most likely not a security under existing United States laws, as previously said by U.S. Securities and Exchange Commission (SEC) Division of Corporate Finance head William Hinman.
“Based on my understanding of the present state of Ether, the Ethereum network and its decentralized structure, current offers and sales of Ether are not securities transactions,” Hinman said on June 14, 2018.
Indirect comment on Ethereum
In a letter, Clayton said that he agrees with Hinman’s explanation when a cryptocurrency transaction does not represent an investment contract or the transfer of a security.
“I agree with Director Hinman’s explanation of how a digital asset transaction may no longer represent an investment contract. 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.”
However, according to Marco Santori, the president of Blockchain.com, one of the largest cryptocurrency wallet operators in the global market, the statement by Clayton does not directly confirm the regulatory nature of Ethereum to Congress.
Clayton said that he agrees with Hinman’s explanation on the point in which a token can no longer be accurately characterized as a security but did not directly and conclusively state that Ethereum is not a security under existing laws, Santori explained:
“Clayton didn’t say that ‘Ether is no longer a security.’ He said he agreed with Hinman’s explanation of when a token is no longer a security.