SEC concerned over ‘Ether is not a security’ statement

Newly released documents showing edits that were made to a 2018 speech given by former director of the Security and Exchange Commission’s corporate finance division Bill Hinman suggest the editors were concerned his statement might undermine the idea that Ether (ETH) is a security. 

This could risk locking the agency into a position it would find hard to change at a later date, the SEC comments warn.

“Even with the caveats in the sentence, it seems that it would be difficult for the agency to take a different position on Ether in the future,” the edits to the documents read. “Further, the rest of the paragraph strongly implies that the thinking applies to Ether.”

The Hinman documents refer to internal SEC messages concerning a 2018 speech given by Hinman in which he said that, while cryptocurrencies such as Bitcoin (BTC) and Ether may start off as securities, it’s possible for them to become something more akin to a commodity once they become sufficiently decentralized.

Ripple CEO Brad Garlinghouse said June 12 that the documents would prove to be “well worth the wait.”

Related: Ripple case: Pro-XRP lawyer tips outright SEC victory at ‘less than 3%’

The unsealing of the documents comes amid an extremely turbulent time for the crypto industry. June 13 also sees the federal court hear the SEC’s motion to freeze the assets of Binance.US, following on from a spate of legal action against the exchange.

The SEC first took legal action against Ripple in December 2020, alleging that the sale of its native XRP (XRP) token represented an unregistered securities offering. Since then, Ripple has denied XRP is a security, arguing it does not satisfy the Howey test.

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