Categories: CryptoEthereumRipple

SEC Chairman Affirms Stance that Ethereum (ETH) is Not a Security, Could XRP be Next?

The Securities and Exchange Commission’s (SEC) Chairman reaffirmed his agency’s previous stance that Ethereum (ETH) is not a security product, and as such it falls under different regulatory structure that is far more crypto-friendly. He also added that cryptocurrencies similar to Ethereum are also exempt from being classified as securities – although he didn’t name any specific cryptos.

Although this is certainly positive for Ethereum investors, it doesn’t come as a big surprise, and the cryptocurrency that investors are most interested in hearing what the SEC’s thoughts on is XRP – the cryptocurrency most commonly associated with FinTech company Ripple.

Jay Clayton: SEC Has Taken a Balanced Regulatory Approach Towards Crypto

Although many investors and crypto enthusiast see regulatory agencies like the SEC as the “boogeyman” who is out to halt innovation that could pose risks to investors, Clayton explained in a recent response to a letter from Coin Center that he believes the agency has taken a balanced approach towards regulating the nascent markets.

“Overall, I believe we have taken a balanced regulatory approach that fosters responsible innovation in this area, while also protecting investors and the markets,” Chairman Clayton explained while referencing the application of federal securities laws to digital assets.

Importantly, along with affirming his agency’s previous decisions regarding the classification of cryptocurrencies like Bitcoin and Ethereum as non-securities products, Clayton also explained that they will continue to use the “Howey test” along with other tests developed through case law to determine the regulatory status of assets.

“Generally, we look at whether the digital asset fits the definition of a security as set forth in the federal securities laws… We also apply tests developed through case law, including the well-established ‘investment contract’ test articulated by the Supreme Court in SEC v. Howey and its progeny,” he noted.

Could XRP be a Securities Product?

It has long been speculated that XRP could be a securities product under the regulatory frameworks set forth by the SEC – and the cryptocurrency’s close relationship to FinTech company Ripple hasn’t helped its case.

After affirming that Ethereum is a non-securities product, investors are curious to know if XRP is also a non-securities product.

Despite this, the crypto community was surprised to find that the crypto was recently listed on cryptocurrency exchange Coinbase, which led some investors to believe that the exchange determined – through a thorough due diligence process – that the digital asset is not, in fact, a securities product.

Although Clayton did not go as far to mention any cryptos by name in his letter, and those affiliated with the SEC have largely held their tongues when it comes to XRP, he did explain that some products that could initially be designated as securities products may ultimately grow out of that definition.

“A digital asset may be offered and sold initially as a security because it meets the definition of an investment contract, but that designation may change over time if the digital asset later is offered and sold in such a way that it will no longer meet that definition,” he explained.

It is unclear whether or not XRP may be one of these types of assets, but either way the crypto community will likely be pleased to hear that the powerful agency is moving slow and deliberately when it comes to regulating individual digital assets.

Featured image from Shutterstock.
SEC Chairman Affirms Stance that Ethereum (ETH) is Not a Security, Could XRP be Next? was last modified: March 12th, 2019 by Cole Petersen
Tags: ethereumRipplexrp

Recent Posts

  • Technical

Ripple (XRP) Align Well with Islamic Principles, Rain to offer Support

Ripple prices drop but bullish Bahrain based Rain will offer six XRP trading pairs to their clients Transaction volumes low…

7 mins ago
  • Technical

Tron (TRX) Firm above 2 Cents, Odyssey v3.5 Upgrade is Consequential

Tron prices steady above 2.1 cents Odyssey v3.5 lays the ground for HNWI says Justin TRX volumes must exceed 15…

1 hour ago
  • Technical

Mt Gox Settlement and $593 Million of BTC and BCH, Will Bitcoin Rally?

Bitcoin prices steady after yesterday’s sell-off Mt Gox trustee approved 802,521 BTC as claims Volumes stable but below average Wholesale…

2 hours ago
  • Analysis
  • Bitcoin

How Bitcoin Higher High Formation Could Push It to $2,000

The next upside push in the bitcoin market could prompt the cryptocurrency a form new bottom below $3,100. Josh Rager,…

5 hours ago
  • Analysis

Bear Market Will Stop Crypto Exchanges Faking Volume, Says Researcher

A report by the Blockchain Transparency Institute (BTI) claims that many exchanges are using bots to fake trading volume. Their…

6 hours ago
  • Bitcoin
  • Industry

Why This Crypto Analyst Expects For Bitcoin To Fall Under $2,000

Over recent weeks, the industry news cycle has seemingly ticked positive, stakeholder sentiment is more cheery than sardonic, and the…

8 hours ago