As we just found out from the SEC’s chairman, bitcoin will not be treated as a security. However, most tokens – especially those sold at ICO – will be treated like securities. But where does that leave Ethereum, and other platforms on which tokens can be launched?

Read more at http://telegra.ph/Bitcoin-is-not-a-security-Just-about-all-your-tokens-are-05-02

Bitcoin is a fairly easy case from the regulatory point of view. It’s a currency, a medium of exchange. The community has been arguing this for years and, with a few exceptions, members of Congress and regulators have followed suit. In other words, bitcoin is money – or, at the very least, a commodity like gold.

Tokens that launched an ICO are likewise very simple. They were generally issued by a company, which raised money, with the lure of returns to investors in one form or another. From the regulators’ point of view, that’s also cut and dried.

But what about Ethereum itself? A $70 billion platform, launched by a company after a 2014 crowd sale. That starts to look a lot like a security, just like the others. But on the other hand, Ethers are the fuel of the platform, and it’s a decentralised ecosystem that makes it possible for miners to collectively execute smart contracts – like bitcoin makes it possible for miners to collectively transfer value. No single party is responsible for delivering value. That’s more like the bitcoin/currency model.

So regulators are figuring this one out, and it’s taking a little longer because it’s not as clear cut as other cases. The SEC (Securities and Exchange Commission) and CFTC (Commodity Futures Trading Commission) are right now trying to decide whether Ethereum is more like stocks or money. Which side they come down on will have huge implications for Ethereum holders, miners, and token issuers. It will determine the regulatory direction for other platforms that make token creation and smart contracts possible, including NEM and Waves.

One crunch meeting that will be keenly watched in the crypto sphere is coming up on 7 May. We should at least get some hints at that point about which way the wind is blowing.

For more information on bitcoin and the SEC, see https://coincenter.org/link/sec-chairman-clayton-bitcoin-is-not-a-security

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