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Friday, May 4, 2018

The US Government has their eye on Ethereum - what you need to know...

It all started with a story in the Wall Street Journal (link), saying US regulators from both the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) are investigating a number of popular cryptocurrencies to determine if they're considered a security.  The biggest coin on their list to analyze - Ethereum.

In summary, a security is defined as:

"A security is any investment product that can be exchanged for value and involves risk. In order for an investment to be considered a security, it must be readily transferable between two parties and the owner must be subject to the loss of some, or all, of the invested principal. If the product is not transferable or does not contain risk, it is not a security." (Via Investopedia)

But what may save Ethereum from meeting the definition of a security - mining.  Something that obviously no stock or 'security' in the past has featured. Because of mining, Ethereum can be obtained without an investment at all. 

Among those agreeing that the mining factor changes everything is Gary Gensler, who previously served as the 11th chairman of the Commodity Futures Trading Commission.

Ethereum co-founder Joseph Lubin spoke on the issue yesterday, saying;

"We spent a tremendous amount of time with lawyers in the U.S. and in other countries, and are extremely comfortable that it is not a security; it never was a security….”

Regulators are set to meet next week to discuss the issue, and Lubin believes among them are many who actually have a strong understanding of cryptocurrency - specifically stating the ones who matter "understand what Ethereum is".
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Author: Mark Pippen
London News Desk