Hi Folks,

There’s a very important news today which is going to impact the digital currency markets in the coming months. This is the speech by William Hinman, director of SEC which mention that bitcoin and ethereum should not be considered as securities.This is published on SEC website.

Link below: https://www.sec.gov/news/speech/speech-hinman-061418

Key essence of the speech:

“Digital asset transaction may no longer represent a security offering. If the network on which the token or coin is to function is sufficiently decentralized – where purchasers would no longer reasonably expect a person or group to carry out essential managerial or entrepreneurial efforts – the assets may not represent an investment contract.“

According to Hinman, the key to determining if a coin is considered as security if it is sufficiently decentralized and no central third party whose efforts are a key determining factor in the enterprise. However he further adds that labeling a digital asset a “utility token” does not turn the asset into something that is not a security.

Viewpoint and implications:

This is an important step which allay a lot of fear that digital assets are going to be regulated as securities. The message in here is clear:

Bitcoin and ethereum are here to stay as investment vehicle

ICOs would still remain unregulated by the US for the time being and need not follow the strict process as per all IPO procedures.

With US taking the lead to address that bitcoin and ethereum are not securities,we expect other countries to be take a more lenient stance in the area of regulating digital currencies.

Food for thought

The key to not being classified as security by SEC is due to the decentralization network of BTC and ETH. A question that struck my mind is if digital assets are not decentralized or partially decentralized like EOS with only 21 delegated nodes. Should these assets be then regulated as securities?

I think the whole issue is a controversial one, I am sure there are hardcore supporters and antagonists of EOS. Notwithstanding the point I am trying to make is that

EOS has raised so much funds and with rising market value it may well catch the attention of regulators.

Future ICOs developed on EOS platform, may trigger another round of questioning, whether ICOs should be regulated as securities. However, we can leave the ICO issue aside for now.

Market view

Post announcement of the news, ethereum spike up by ~13% from USD460 to USD520 levels. %. However, it comes down gradually over the day breaching the USD500 mark. This actually imply that despite this positive news, market sentiments remain weak and new money is not entering the market and we remain in a bear market.

Notwithstanding, with the release of this speech, I am long term bullish on ether and BTC.

I am confident that they are here to stay. However, I do not expect a sudden spike in short term prices, and remain a hodler for both ether and BTC.

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