In a report published on June 15, JPMorgan analyst Nikolaos Panigirtzoglou said that SEC officials were unsure of Ethereum’s legal status in 2018.
Leading American financial services company JPMorgan has highlighted the significant impact of the publication of the Hinman documents on Ethereum in an ongoing court case between the United States Securities and Exchange Commission (SEC) and the chain firm. of Ripple Labs blocks.
According reportsThe Hinman documents, which include emails linked to former SEC head William Hinman’s 2018 speech on the regulatory status of Ethereum (ETH), can potentially boost the second-largest crypto asset and start a move toward more decentralization in space.
In the speech, the former head of the SEC’s corporate finance division said that ether is not considered a security in the eyes of the financial regulator. This is in contrast to the SEC’s position on XRP, which he has classified as a security.
The SEC’s lawsuit against Ripple alleges that the company sold XRP as an unregistered security. Last week, the blockchain-based company released Hinman’s emails as part of its defense against the SEC’s civil lawsuit, shedding light on a crucial aspect of his argument with the Commission.
The SEC is not sure about the legal status of Ether
In a report published on June 15, JPMorgan analyst Nikolaos Panigirtzoglou said that SEC officials were unsure of Ethereum’s legal status in 2018. The report notes that Hinman’s documents acknowledged the existence of an “other category” in which certain assets, such as ether, do not fit. the traditional definition of values.
While there may be a need for regulation to protect consumer interests, the crypto asset is not considered a security due to the lack of a control group as defined by the Howey test, a legal criterion used to determine whether an investment qualifies as a value. according to the report.
Additionally, the documents are expected to influence ongoing US Congress efforts to provide a clear regulatory framework to govern the crypto industry.
“The Hinman documents are likely to influence the direction of the current effort by the US Congress to regulate the crypto industry in a way that ether avoids being designated as a security,” Panigirtzoglou said.
JPMorgan proposed regulating Ethereum as a commodity
JPMorgan proposed in its research to place ether in the same category as Bitcoin (BTC) and regulate it as a commodity under the supervision of the Commodity Futures Trading Commission (CFTC). Last year, two US senators, Sens Cynthia M. Lummis and Kirsten Gillibrand, signed a bill giving the CFTC authority to regulate cryptocurrencies that fall under the commodity category.
According to the report, this approach would establish a new “other category” explicitly tailored to decentralized cryptocurrencies like ether that manage to fall outside of the SEC’s jurisdiction.
Furthermore, the report indicated that the level of decentralization of a crypto could determine whether it is designated as a security.
“A new “other category” could be introduced specifically for ether and other cryptocurrencies that are decentralized enough to avoid being classified as securities. The more decentralized a cryptocurrency is, the more likely it is to avoid being designated as a security,” the bank said.
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Chimamanda is a cryptocurrency enthusiast and seasoned writer focusing on the dynamic world of cryptocurrency. He joined the industry in 2019 and has since developed an interest in the emerging economy. He combines his passion for blockchain technology with his love of travel and food, bringing a fresh and engaging perspective to his work.
