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Ethereum [ETH]: SEC Chairman Clayton agrees to Hinman’s analysis

Priya

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Ethereum [ETH]: SEC Chairman Clayton agrees to Hinman's analysis
Source: Unsplash

Earlier this week, the entire cryptocurrency community was abuzz with news surrounding Ethereum [ETH], the second largest cryptocurrency by market cap. It was reported that Jay Clayton, the Chairman of U.S. Securities and Exchanges Commission, deemed ether wasn’t a security. However, this was not the reality as the Chairman only agreed to a few statements made by William Hinman, the Director of Corporate Finance – SEC, from back in 2018.

The news broke out following a report published by Coin Center, a leading non-profit research and cryptocurrency advocacy group. With an intention to get more clarification, the team along with US House of Representatives member Ted Budd, reached out to the Chairman via a letter signed by several colleagues, with respect to whether basis tokens were classified as securities.

The letter, in total, had three questions pertaining to the tokens being classified as securities. One of these questions was whether Jay Clayton agreed with the statements made by Hinman.

In particular, he was asked whether a token can be analyzed separately from the original purchase agreement, even if it can clearly be classified as an investment contract. If it is, then could the token be classified as a non-security under this circumstance?

In a letter addressing these questions, Clayton agreed with the “analysis of whether a digital asset is offered or sold as security is not static and does not strictly inhere to the instrument”. He stated that a token can be offered/ sold as a security because it meets the terms of investment contract. However, its designation could be subject to change if it did not meet the definition over time.

He said,

“I agree with Director Hinman’s explanation of how a digital asset transaction may no longer represent an investment contract, if for example, purchasers would no longer reasonably expect a person or group to carry out the essential managerial or entrepreneurial efforts. Under those circumstances, the digital asset may not represent an investment contract under the Howey framework.”

The “Ether is not a security” story



Even though Jay Clayton did not specifically mention Ether or any other token in the return letter, news of his ‘agreement’ spread across the cryptocurrency space. This was mainly because Clayton agreed to Hinman’s explanation on tokens being classified as securities and non-securities. In his explanation, he quoted Ether for a token that could have been classified as a security in the beginning, but may no longer be, resulting in several members believing the notion that Clayton also considers Ether to be a non-security.

He had said,

“And putting aside the fundraising that accompanied the creation of Ether, based on my understanding of the present state of Ether, the Ethereum network and its decentralized structure, current offers and sales of Ether are not securities transactions.”

Source: SEC

Source: SEC





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Priya is a full-time member of the reporting team at AMBCrypto. She is a finance major with one year of writing experience. She has not held any value in Bitcoin or other currencies.

Bitcoin

Bitcoin Dominance Index [BDI] falls short of Bletchley Ethereum Token Index [BETI] in 2019

Biraajmaan Tamuly

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Bitcoin Dominance Index [BDI] outperformed by Index based on the Ethereum blockchain in 2019
Source: Pixabay

One of the key factors which is often used to represent or indicate the potential of a particular cryptocurrency’s growth is its market capitalization. When the market capitalization of a coin or token showcases a positive hike, it usually has a positive impact on that particular asset’s market.

According to LongHash, the Bitcoin Dominance Index [BDI], which is used to measure Bitcoin’s market cap had been the dominant index since the beginning of 2019. It was observed that the BDI improved from 53 percent to 58 percent over the past few weeks after the largest crypto-asset underwent multiple price hikes.

XRP, which dominated Bitcoin by 1,600% back in 2017 on cryptocurrency exchange Bittrex in 2017, was currently down by almost 50% against Bitcoin in 2019. Ethereum [ETH] fared better comparatively, but was still down by 14% against the Bitcoin.

However, the Bletchley Ethereum Token, a token built on top of Ethereum, seemed to have outperformed Bitcoin this year.

The Bletchley Ethereum Token Index [BETI] can be utilized by investors for their allocation to tokens placed on top of the Ethereum blockchain. However, it should be noted that Ethereum is not a part of the index as it is an independent entity. The BETI is a weighted index, which means that the tokens with dominant market caps will take up a larger part of the index and the re-balance will take place at the end of a particular month.

For example, Tron [TRX] and Binance Coin [BNB] currently take up more than half of the BETI’s Weighted Index. Since the launch of their DEX, BNB has enjoyed a lucrative year with multiple hikes bringing the coin to $30 from under $6. Tron also witnessed major growth in market cap as it was up by 40% in comparison to the US dollar.



However, it is important to note that the major tokens on the BETI’s weighted index have all launched their own blockchain, at press time. Hence, it can indicate that the dominance enjoyed by BETI over the BDI over the last few months could point to a situation where the Ethereum blockchain was preferred for the launch of various tokens.

Despite the aforementioned reason, it is safe to state that Bitcoin was not the only entity which dominated the crypto-space this year.





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