Research Says Bitcoin’s Rise Caused By Market Manipulation, SEC: Cryptocurrencies Are Not Securities
Cryptocurrencies received some good news and some bad news this week. First the good news: an SEC official said that Bitcoin and Ether are not securities. Now the bad news: research says that Bitcoin’s meteoric rise in 2017 was heavily fueled by market manipulation.
William Hinman, the director of corporate finance at the U.S. Security and Exchange Commission, gave a speech at the Yahoo Finance All Market Summit in San Francisco this week. Hinman broached the topic of cryptocurrencies and he said that Bitcoin and Ether are not securities and thus should not be regulated as securities.
“When I look at Bitcoin today, I don’t see a central third-party whose efforts are key factor to determining the success of that enterprise,” Hinman said. “The network on which Bitcoin functions is operational and appears to have been decentralized for some time. Moreover, putting aside the fundraising that accompanied the creation of Ether, based on my understanding of the present state of Ether, the Ethereum network, its decentralized structure, we believe that current offers and sales of Ether are not securities transactions.”
The digital currency world celebrated this news because this means that since cryptocurrencies are not considered to be securities and they will not be scrutinized as if they were securities. “We are glad the SEC agrees with our long-held analysis of how securities law applies to decentralized cryptocurrency networks like Bitcoin and Ethereum,” said Jerry Brito, executive director of Coin Center, a non-profit focused on issues facing cryptocurrencies.