Nothing pumps up the cryptocurrency community, than when a government official talks favourably about cryptocurrencies. Interestingly, in this case, media outlets completely misunderstood what was being said and they ran with their interpretation of a statement.
Jay Clayton, the chairperson of Securities and Exchange Commission (SEC), has been in the news quite often, for his views on cryptocurrencies and the never-ending question: “Is Ethereum a security?”
Last year, SEC’s Director of the Division of Corporation Finance William Hinman said Ethereum is not a security. As soon as the news of SEC chairman declaring Ethereum is not a security came out, it had an impact in the market which has been falling for a while. Immediately after the announcement, the total market cap jumped from $271.6 Billion to $288.1 Billion, increasing by $16.5 Billion in just one hour.
Now, a letter sent by Clayton to Representative Ted Budd is doing the rounds and media houses are believing that it somehow reads as the former saying that Ethereum is not a security.
Clayton defined securities by saying, “Generally, we look at whether the digital asset fits the definition of a security as set forth in the federal securities laws. The Securities Act of 1933 and the Securities Exchange Act of 1934 define “‘security” broadly to encompass virtually any instrument that may be sold as an investment.”
But, nowhere in the letter does Clayton say that he thinks Ethereum is not a security. The letter sent by Rep Budd had asked if Clayton agreed with the speech given by Director Hinman’s June 2018 speech on cryptocurrencies. Referring to that speech, Clayton said, “I agree that the analysis of whether a digital asset is offered or sold as a security is not static and does not strictly inhere to the instrument. 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.”
Maybe it’s time media houses take a deep breath, wait and watch, rather than jumping to conclusions.
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