- The unveiling of the Hinman documents in the SEC-Ripple lawsuit is likely to benefit Ether, encouraging a trend towards greater decentralization in the crypto market, as per a JPMorgan research report.
- The documents could explain why Ether has not faced regulatory action while other crypto tokens have been targeted, and they may prompt Congress to categorize Ether similar to Bitcoin under CFTC regulation.
Last week’s disclosure of the Hinman documents within the U.S. Securities and Exchange Commission’s (SEC) legal action against Ripple may provide a significant impetus to Ether (ETH). JPMorgan suggests in a recent research report that this development is likely to catalyze a shift towards increased decentralization in the world of cryptocurrencies.
Published by Ripple in defense of the SEC lawsuit, these emails are linked to a 2018 discourse by William Hinman, the former Director of Corporation Finance, wherein he asserted that Ether did not bear resemblance to a security. The report highlighted that senior SEC leadership in 2018 did not classify Ether as a security, acknowledging a regulatory void that arises when tokens on a sufficiently decentralized network cease to be securities.
The report, led by analyst Nikolaos Panigirtzoglou, notes the emergence of an “other category,” as the speech suggests. The paper proposes,
“It is not a security because there is no controlling group (at least in the Howey sense) yet there may be a need for regulation to protect purchasers.”
The term ‘Howey sense’ refers to the Howey Test, a standard used to ascertain if transactions qualify as investment contracts and, thus, are subject to U.S. securities laws.
This new light shed on the subject could clarify why the regulatory body has yet to act against Ether, even while it pursues other crypto tokens. The analysts theorize that these revelations might steer the U.S. Congress’s current efforts to regulate the crypto industry in a way that prevents Ether from being labeled a security.
The most straightforward path for Congress might be to group Ether with Bitcoin (BTC) and supervise it as a commodity under the Commodity Futures Trading Commission (CFTC). Alternatively, the bank proposed the introduction of a new “other category” exclusive to Ether and other sufficiently decentralized cryptocurrencies to avoid them being classified as securities.
These Hinman documents, according to the report, could intensify the competition among major cryptocurrencies to achieve greater decentralization and resemble Ether more closely.
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