Many investors are worried as to how the US SEC will classify Ethereum as well as Bitcoin. If indeed, it classifies Ethereum as well as Bitcoin as securities, the amount of legal framework which will apply to them will increase significantly. As a result, the investors will not be able to invest easily.

Ethereum and Bitcoin, not securities:

According to SEC executive, William Hinman, Bitcoin, as well as Ethereum, cannot be considered as securities. The main reason for this is that they are decentralized. Normally, when it comes to securities, they are not that decentralized. The promoters or rather the company board issues the securities and sells them. On the other hand, when you look at Ethereum as well as Bitcoin, they are not associated with any company board. Moreover, buying and selling is easily possible by the various stakeholders.

“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 And, as with bitcoin, applying the disclosure regime of the federal securities laws to current transactions in ether would seem to add little value,” Hinman said at Yahoo’s All Market Summit: Crypto in San Francisco.

Another distinction which he made was that the expectations of the buyers are pretty limited from the development team when they are buying Ethereum as well as Bitcoin. This clearly indicates that it cannot be considered as a security. Since they are completely decentralized, the level of risk which is involved is on the lower side. Also, they cannot be considered as securities which further protects the investors.

However, he was quick to add that even in the current form, some of the tokens which are being launched with the help of ICO’s can be considered as securities. That is why you cannot expect that none of the tokens are actually securities. Sure enough, some of the tokens will classify as securities. This is one of the main reasons why investors should be worried if they are investing in the lesser-known Altcoins.

Decentralization:

All will be dependent on the level of decentralization which is present in the tokens. If they are sufficiently decentralized, you can be sure that they will not be regarded as securities. This will ensure that the users will be able to trade them quite easily. Moreover, the applications of the tokens will increase significantly when they are not regarded as securities. This is one thing which many of the businesses who are using the blockchain technology are taking into account. The applications can be shut down if they are regarded as securities.

With some clarity on the status of Bitcoin and Ethereum, it seems like finally, they will be able to bounce back from the bottoms which they have formed recently.

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