William Hinman, Head of the Division of Corporate Finance for the SEC, said in a speech at the Yahoo All Markets Summit: Crypto conference in San Francisco that bitcoin and ether are not securities. However, he did establish that a majority of initial coin offerings (ICOs) are securities that should fall under the regulatory control of the SEC and its securities laws.
The determining factor that Hinman deemed as paramount to whether bitcoin is a security focuses on decentralization–the cryptocurrency lacks a central party whose efforts are a key factor in the enterprise.
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“Central to determining whether a security is being sold is how it is being sold and the reasonable expectations of purchasers,” said Hinman. “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.”