In an investigative report released Thursday by JPMorgan (JPM), the release of the Hinman documents last week in the US Securities and Exchange Commission’s (SEC) lawsuit against Ripple is a boost for Ethereum (ETH) and a move towards greater decentralization in the crypto market. He said it might trigger it. In other words, Ethereum was pointed out for the Hinman documents, which are thought to be support for Ripple. Here are the details…
How are the Hinman documents affecting the altcoin market?
Emails linked to former Director of Corporate Finance William Hinman’s 2018 speech in which he said that Ethereum is not like a security were published by Ripple in its defense against the SEC lawsuit last Tuesday. The report states that the top leadership at the SEC did not consider ether a security in 2018, and SEC officials acknowledged that “the fact that tokens in a decentralized network are no longer securities creates a regulatory vacuum.”
“The conversation acknowledges that there is another category,” wrote analysts led by Nikolaos Panigirtzoglou, adding that “it is not a security (in the Howey sense at least) as there is no controlling group, but regulation may be needed to protect buyers.” Panigirtzoglou was referring to the Howey Test, which was used to determine which transactions would qualify as investment contracts and thus be subject to US securities laws. An asset can be classified as a security if money is invested in a joint venture and profits are expected from the efforts of others.
Will Ethereum benefit from this situation?
JPMorgan says these disclosures may explain why the regulator has not taken action against ether while targeting other crypto tokens this year. “The Hinman documents are likely to affect the direction of the current US congressional effort to regulate the crypto industry in a way that prevents ETH from being identified as a security,” analysts wrote.
The easiest solution for Congress would be to put ETH in the same category as Bitcoin (BTC) and regulate it as a commodity under the oversight of the Commodity Futures Trading Commission (CFTC). The bank said it could introduce a new “other category” specific to ether and other cryptocurrencies that are decentralized enough to avoid being classified as securities, adding that “the more decentralized a cryptocurrency is, the higher the chance it will avoid being identified as a security.” The report noted that the Hinman documents will likely intensify the race among major cryptocurrencies to become more decentralized and look more like ether.
