Ethereum (ETH) has experienced a sharp decline since Saturday, falling from the $1,838 line to the current level of $1,738 while XRP traded sideways. This has caused concern among investors and traders in the Ethereum market.
However, experts and analysts believe that the recent disclosure of the Hinman documents on June 13 could mark a wave of relief for the Ethereum price.
The Hinman documents refer to a series of emails and memos from former Securities and Exchange Commission (SEC) Division of Corporate Finance director William Hinman recently released to the public.
The Hinman documents include a series of emails and memos from the former SEC head, who declared in 2018 that Ethereum’s native token, Ether, is not a security.
Ethereum traders should keep an eye on the XRP case
Recently, the release of emails from former SEC official William Hinman regarding Ethereum has caused a stir in the cryptocurrency community. While some have claimed the documents are irrefutable proof for cryptocurrency, others have downplayed their importance.
However, analyst Adam Cochran has argument that the documents are a nuance that corners current SEC Chairman Gary Gensler.
Hinman’s speech attempted to clarify the SEC’s position on digital assets, such as ETH and XRP, and their relationship to security regulations. In his speech, Hinman went beyond the scope of the Howey test and attempted to understand the nuanced intent of users versus investors. He also questioned the concept of transformation, or whether something can be a value and then no longer be.
The SEC staff’s feedback comment specifically told him that they wanted to move to the discussion of “what is a security” rather than the idea of transformation. And that his concerns came from the differences in implication between the Securities Law and the Stock Market Law.
Hinman specifically called attention to the idea that “promoters” have a very specific legal point of view, and that even a coordinated group of actors working on something would not rise to the level of being considered the promoter if their efforts were nonessential. .
The draft on Ethereum, which was produced after meeting with Ethereum founder Vitalik Buterin and his lawyers, noted that Ethereum was not at the time a security and that the secondary sales did not raise Securities Act concerns, only concerns about the Stock Market Law and the Basic Products Law.
According to Cochran, that footnote is incredibly important, as it points out that the SEC considered secondary sales internally, not promoter sales at the time.
Furthermore, Cochran believes that the documents condemn Gensler’s position because they acknowledge the idea of the ‘reverse transformation’ of an asset becoming a security. Suppose the SEC wanted to argue that Ethereum is a security today. In that case, they must acknowledge the idea of ’transformation’, demonstrate that a developer’s charge is responsible for all secondary sales of an asset, and break all precedents for horizontal and vertical uniformity.
Cochran further stated:
For Gary to conclude that Ethereum’s proof-of-stake is a security, he would have to fight a barrage of precedents in the most contentious part of Howey’s analysis, and admit to the idea that the state of securities can change over time with decentralization.
In general, many market analysts believe that the disclosure of the Hinman documents could increase the price of Ethereum in the short term. This is because it removes some of the regulatory uncertainty surrounding Ethereum and could increase investor confidence in the cryptocurrency.
Featured Image from Unsplash, Chart from TradingView.com
