The ultimate conclusion in an investment contract analysis can often depend on whether the purchasers at that time were motivated by the desire to buy Ether or speculate on its future value. I am seeing, strictly speaking, the token – or coin or whatever the digital information packet is called – all by itself is not a security, just as the orange groves in Howey were not, Hinman said. For example, if you were to buy a condominium to reside in, that condominium would not be considered a security because it was bought with the intent to use it creating a cryptocurrency on ethereum. In those cases, the SEC would not maintain oversight. Determining whether a cryptocurrency is a security, and therefore falls under the purview of the SEC, centers on the circumcstances under which it is sold, Hinman said in his statement. In May, reports surfaced that Ethereum was under regulatory scrutiny by the SEC, which was considering whether the blockchain-based digital currency should be classified as a commodity or a security.
Howey s own fruit groves, therefore, were found to be tied to its leased groves, which qualified as an investment contract instrument – or a security. government seeking to protect investors purchasing the digital currencies on open exchanges creating a cryptocurrency on ethereum. If they were purchasing it to speculate on the potential value increase of Ether in the future, then you potentially have a problem from a securities law standpoint. The Howey test is famously flexible, both Fallon and Jennings agreed, and as a result it can be applied in innovative contexts, which could allow Ether to be seen as a commodity. But what about cases where there is no longer any central enterprise being invested in or where the digital asset is sold only to be used to purchase a good or service available through the network on which it was created. The determining question for Ethereum and other cryptocurrencies established through ICOs may be whether those purchasing the digital coins had a reasonable expectation of profits, Jennings explained in an email.
Because the Ethereum network is based on open-source protocols, it s relatively easy for new distributed applications to be created for it. 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, Hinman said in a statement. And, in that regard [bitcoin] wouldn t pass the Howey test.Verge.. .Hshare.ICON. Monero.