Will May 7 be the beginning or the end of an Ethereum renaissance?

On May 7, the SEC and CFTC will be meeting to determine whether Ethereum is a non-compliant security. Markets seem to be optimistic, stocking up on Ethereum prior to any forthcoming announcements from the SEC and CFTC regarding the legal status of the digital currency.

If declared a security, all kinds of tax laws would come into effect for the trading of Ethereum, likely resulting in a massive drop in value for the currency, at least temporarily. On the other hand, if not declared as such, Ethereum, along with other similar currency technologies, may finally be able to advance unfettered in the economy, leading to an explosion in investment from larger institutional traders.

The "Howey test" has long been used to decide whether or not a given asset is indeed a security. The trouble is, cryptocurrencies like Ethereum, with their ability to be used as a platform for tokens using smart contracts along with their fluctuating values and ability to be traded as a store of value and monetary transaction medium, do not neatly fit any single interpretation of such a test. Entities like the SEC and CFTC are attempting to fit a square peg into a round hole in their efforts to categorise Ethereum. It is akin to the old story of the blind men touching different parts of the elephant and all arriving at different conclusions as to the nature of the creature.

Ethereum is a complex creature. Hopefully, wisdom prevails and the regulatory group concludes that Ethereum does not fit strictly with the definition of a security. In reality, it is just too complex and versatile to be defined in this limited sense.

That brings us to the million dollar question: Buy Ethereum now or wait until the announcements?

This is one situation where I really could not confidently say which way to go. I know which way I'm hoping things go, along with the rest of the crypto market, but I'm not as confident as I would like to be in this situation. This is not financial advice, but I would hedge my bets and keep my investments diversified with BTC and other currencies that are clearly not securities, while keeping some funds in Ethereum - erring on the side of caution perhaps with some stop limits set in place - in the hopes of positive news. This really could create a nice pay-off in the coming months, but I would not be putting all my digital eggs in this basket right now.

*This is not professional trading advice - it's just my opinion!

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sources:

https://consumer.findlaw.com/securities-law/what-is-the-howey-test.html

image source:

https://cryptocrimson.com/news/ethereum-eth-price-analysis-11-february-2018