US SEC Official Says Bitcoin, Ether Are Not Securities

Jun 15, 2018 at 19:08

Bitcoin and Ether are not securities as declared by an official of the US Securities and Exchange Commission (SEC) during the Yahoo Finance All Markets Summit: Crypto conference.

This comes after much time scrutinizing whether cryptocurrencies should be under the scope of the related securities laws.

During his speech at the conference, SEC’s Division of Corporation Finance director William Hinman said imposing disclosure regime of the federal securities law on transactions using Bitcoin and Ether “add[s] little value” since the network they work on are decentralized.

“And so, when I look at Bitcoin today, I do not see a central third party whose efforts are a key determining factor in the enterprise. The network on which Bitcoin functions is operational and appears to have been decentralized for some time, perhaps from inception,” he said.

As for Ether, he said “the Ethereum network and its decentralized structure, current offers and sales of Ether are not securities transactions.”

Meanwhile, the SEC official said not all initial coin offerings (ICOs) offer securities but it does not mean the regulator will not be out of the scope of US securities laws.

“Central to determining whether a security is being sold is how it is being sold and the reasonable expectations of purchasers,” Hinman said.

If tokens are sold as part of an investment, to non-users or by promoters to develop the enterprise with expected returns, ICOs will be considered as securities as long as they have investment contracts and, therefore, need to be regulated under relevant laws.

“Without a regulatory framework that promotes disclosure of what the third party alone knows of these topics and the risks associated with the venture, investors will be uninformed and are at risk,” Hinman said.

A copy of Hinman’s speech during the conference can be read at the US SEC website. (link: