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Relevant quote: > And putting aside the fundraising that accompanied the creation of Ether, based on my understanding of the present state of Ether, the Ethere

Relevant quote: > 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. And, as with Bitcoin, applying the disclosure regime of the federal securities laws to current transactions in Ether would seem to add little value. Over time, there may be other sufficiently decentralized networks and systems where regulating the tokens or coins that function on them as securities may not be required. And of course there will continue to be systems that rely on central actors whose efforts are a key to the success of the enterprise. In those cases, application of the securities laws protects the investors who purchase the tokens or coins.

hosh 8y ago
This is published as a transcript of a speech. Is it the official position of the SEC as a whole? I understand that even if it isn't, it does show a glimpse of where the SEC is thinking on this. I'm not so sure about it being an official position though.
- 21 8y ago
  It probably is. A few days ago a SEC guy (maybe the same?) was on CNBC, and they were pushing for an answer to this question, and he refused to make any comment, and said that a position will come in due time.
- jeremyjh 8y ago
  The first sentence has a footnote disclaiming these are personal remarks. Still, I think no one else would have a more relevant opinion about how the SEC is thinking about this. [1] The Securities and Exchange Commission disclaims responsibility for any private publication or statement of any SEC employee or Commissioner. This speech expresses the author’s views and does not necessarily reflect those of the Commission, the Commissioners or other members of the staff.
jjxw 8y ago
It's an interesting distinction which begs the question of how securities enforcement will work on currencies which start off looking like securities and "evolve" out of that designation like Bitcoin and Ether did. As implied by the statement, the "fundraising that accompanied the creation of Ether" would probably qualify as a securities offering since it absolutely relied on central actors to maintain initial development until it had grown sufficiently to become more of a decentralized platform. At what point are token purchases no longer protected by securities law? The SEC (or SEC leadership) has shown a willingness to take a fairly nuanced view on how cryptocurrencies are classified. Will be interesting to see how this thinking evolves as nuance comes with complexity.
- fredgrott 8y ago
  be careful of relying on that quote..Ethereum applied and got registered to fund raise under current laws...see the blog announcemnet of said crowdsale: https://blog.ethereum.org/2014/07/22/launching-the-ether-sale/ https://blog.ethereum.org/2014/07/22/launching-the-ether-sal...
  - deltateam 8y ago
    Applied is a mischaracterization of what Ethereum did. Ethereum got a legal opinion from a law firm in the United States, and simultaneously convinced the regulators in the Canton of Zug, Switzerland to create a completely new term for them. State regulations in the Swiss Confederacy extend to the sovereign protection of the Switzerland brand and all of its economic treaties. Ethereum nor the Ethereum foundation applied for US securities anything. Not a Reg D offering, not Reg S, not anything. The parent question remains valid: if one did register as a security, how does the asset transition to not being a security. Sounds like we need a new Reg for transitional securities. As it stands, the SEC is still applying its broad discretion to not levy criminal and civil sanctions to unregistered transitional securities.
- clarkmoody 8y ago
  Small correction: Bitcoin did not start as a fundraiser.
Alex3917 8y ago
So basically it's probably fine for GDAX to continue to let folks trade Ethereum, but that doesn't mean that Vitalik et al. won't get indicted. IMHO the latter is much more important than the former with respect to the future value of the asset, so saying that Ethereum likely isn't currently security doesn't strike me as being especially meaningful.
- CryptoPunk 8y ago
  There's no chance Vitalik et al will get indicted. The SEC is not going to try to make an example out of the most successful decentralized protocols which did its crowdfunding long before they issued any kind of advisory on the application of US securities laws on token sales. They did not indict the organizers of the DAO, and that had much more security-like features, like passive dividends for holders of its tokens, and also collapsed and came close to losing the majority of its contributors' funds. The SEC recognizes smart contract based crowdfunding is a new financial technology still in its infancy, and are not going to come down with a iron fist on anything that doesn't blatantly defy securities law. So far they've only gone after blatant scams (organizers lying about the project's credentials, misappropriating funds, misrepresenting assets held as collateral, etc).
  - Alex3917 8y ago
    > which did its crowdfunding long before they issued any kind of advisory on the application of US securities laws on token sales. If the SEC had provided some sort of novel guidance then this would make sense, but their statements have consistently been that token sales are nothing new and the same laws from the last 70+ years apply.

hosh 8y ago

This is published as a transcript of a speech. Is it the official position of the SEC as a whole? I understand that even if it isn't, it does show a glimpse of where the SEC is thinking on this. I'm not so sure about it being an official position though.

21 8y ago
It probably is. A few days ago a SEC guy (maybe the same?) was on CNBC, and they were pushing for an answer to this question, and he refused to make any comment, and said that a position will come in due time.
jeremyjh 8y ago
The first sentence has a footnote disclaiming these are personal remarks. Still, I think no one else would have a more relevant opinion about how the SEC is thinking about this. [1] The Securities and Exchange Commission disclaims responsibility for any private publication or statement of any SEC employee or Commissioner. This speech expresses the author’s views and does not necessarily reflect those of the Commission, the Commissioners or other members of the staff.

jjxw 8y ago

It's an interesting distinction which begs the question of how securities enforcement will work on currencies which start off looking like securities and "evolve" out of that designation like Bitcoin and Ether did. As implied by the statement, the "fundraising that accompanied the creation of Ether" would probably qualify as a securities offering since it absolutely relied on central actors to maintain initial development until it had grown sufficiently to become more of a decentralized platform. At what point are token purchases no longer protected by securities law? The SEC (or SEC leadership) has shown a willingness to take a fairly nuanced view on how cryptocurrencies are classified. Will be interesting to see how this thinking evolves as nuance comes with complexity.

fredgrott 8y ago
be careful of relying on that quote..Ethereum applied and got registered to fund raise under current laws...see the blog announcemnet of said crowdsale: https://blog.ethereum.org/2014/07/22/launching-the-ether-sale/ https://blog.ethereum.org/2014/07/22/launching-the-ether-sal...
- deltateam 8y ago
  Applied is a mischaracterization of what Ethereum did. Ethereum got a legal opinion from a law firm in the United States, and simultaneously convinced the regulators in the Canton of Zug, Switzerland to create a completely new term for them. State regulations in the Swiss Confederacy extend to the sovereign protection of the Switzerland brand and all of its economic treaties. Ethereum nor the Ethereum foundation applied for US securities anything. Not a Reg D offering, not Reg S, not anything. The parent question remains valid: if one did register as a security, how does the asset transition to not being a security. Sounds like we need a new Reg for transitional securities. As it stands, the SEC is still applying its broad discretion to not levy criminal and civil sanctions to unregistered transitional securities.
clarkmoody 8y ago
Small correction: Bitcoin did not start as a fundraiser.

Alex3917 8y ago

So basically it's probably fine for GDAX to continue to let folks trade Ethereum, but that doesn't mean that Vitalik et al. won't get indicted. IMHO the latter is much more important than the former with respect to the future value of the asset, so saying that Ethereum likely isn't currently security doesn't strike me as being especially meaningful.

CryptoPunk 8y ago
There's no chance Vitalik et al will get indicted. The SEC is not going to try to make an example out of the most successful decentralized protocols which did its crowdfunding long before they issued any kind of advisory on the application of US securities laws on token sales. They did not indict the organizers of the DAO, and that had much more security-like features, like passive dividends for holders of its tokens, and also collapsed and came close to losing the majority of its contributors' funds. The SEC recognizes smart contract based crowdfunding is a new financial technology still in its infancy, and are not going to come down with a iron fist on anything that doesn't blatantly defy securities law. So far they've only gone after blatant scams (organizers lying about the project's credentials, misappropriating funds, misrepresenting assets held as collateral, etc).
- Alex3917 8y ago
  > which did its crowdfunding long before they issued any kind of advisory on the application of US securities laws on token sales. If the SEC had provided some sort of novel guidance then this would make sense, but their statements have consistently been that token sales are nothing new and the same laws from the last 70+ years apply.