An SEC spokesman has said that Bitcoin (BTC) and Ethereum (ETH) are not securities, however, ICOs are securities and they are therefore under the regulatory purview of the SEC. Bitcoin and Ethereums higher level of decentralisation was cited as the reason why they have not been classed as securities,
At the Yahoo All Markets Summit: Crypto conference in San Francisco, William Hinman, a SEC regulatory spokesperson explained in a speech that the biggest challenge to deciding if cryptocurrencies and ICOs are secues is whether there is an expectation of profits from a third party. On the flip side if the investors of the cryptocurrency has an expectation oritif profits the asset could be classed a security. He stated:
"Central to determining whether a security is being sold is how it is being sold and the reasonable expectations of purchasers,"
Hinman explained that the higher the level of centralisation the greater chance of the cryptocurrency being classed a security. He explicitly said Bitcoin was not a security due to its high level of decentralization. He went on to add that Ethereum was not a security due to its high level of decentralization.
Relief for Ethereum Ecosystem
Industry experts already believed Bitcoin to not be a security, however there was significant uncertainty over how the SEC would class Ethereum. It raised $18 mln in 2014 via an ICO and as the SEC which worried many investors it would be in breach of the relevant US securities laws.
Due to the large number of Ethereum ICOs and DApps its status as a security has long been a source of doubt for Ethereum investors and the hundreds of ICOs and DApps that rely on the EVM (Ethereum Virtual Machine). The markets have reacted strongly to the news and in under 1 hour Ethereum has risen 10% to over $520.