The U.S. Congress might place Ethereum in a new regulatory category other than securities, and could also group it with Bitcoin. There is a long going debate in the United States regarding the classification of digital assets. While the Securities and Exchange Commission (SEC) is trying to bring everything under the title of securities, lawmakers are trying to place Ether and Bitcoin in separate columns.
U.S Congress Can Have Different Classification for Ethereum
The recent regulatory actions on the crypto industry by the financial watchdog of the United States, the SEC, increased by 183% post-FTX. This scenario creates a hostile environment for the industry forcing them to move offshore. Fresh lawsuits against Coinbase and the world’s biggest exchange created ripples across the industry.
The digital asset industry has been asking for regulatory clarity from the agency for quite some time, but to no avail. Billionaire Mark Cuban commented that the current SEC crypto regulations are very difficult to understand and follow. Coinbase even opted for legal options to force the agency to provide regulatory clarity.
The debate surrounding the regulatory ordinance surrounding the crypto industry is hot in the United States. People are concerned about the status of the two biggest cryptocurrencies, Bitcoin and ETH. Recently, JPMorgan analyst Nikolaos Panigirtzglou shared his views on the matter.
A crypto media outlet reported his suggestions saying that Congress could classify the second biggest cryptocurrency differently. The analyst said that instead of treating it similarly to Bitcoin, dealing with it otherwise would be helpful. If done, the second crypto by market cap would face lighter regulatory obligations than securities.
The concept of “other category” came after the revelation of Hinman documents. The documents were unsealed by the SEC on June 13 and provide insights from a 2018 speech delivered by a former director of the Securities and Exchange Commission’s Division of Corporate Finance.
During the speech, Hinman argued that Ethereum is sufficiently decentralized to be called a security. Also, the documents reveal certain concerns raised by SEC officials. Classification of crypto tokens as securities, on the basis of sufficient decentralization might create a regulatory issue. Hence the classification into “other category” was thought of.
Does Gary Gensler deserve jail time?
SEC is under water after this 🌊😱
— BluΞ 💙🛠 (@LongedEth) June 12, 2023
On April 18, 2023, the current SEC Chair appeared before the House of Financial Committee. During the trial, he failed to answer whether Ether is a security or not. During his tenure as a professor at MIT, he said that 70% of cryptocurrencies are not securities. But his recent stance is drastically different from that, arguing 99% of them are securities. Overall, the classification is yet to be clarified.
The JPMorgan analyst argues that the Hinman documents might add weight to Ether’s case of not being classified as a security. The impact of this classification on ETH’s value lies in the future. If the cryptocurrency is placed in a different column it would place less burden on the regulatory standards.
Citing Hinman documents, the founder of CryptoLaw, Jon Deaton, argued that the Securities and Exchange Commission might not be the right agency to police the crypto industry. Also, these documents can have a noticeable impact on ETH and ERC-20 tokens, as Ether could be placed on the non-security shelf.
Andrew is a blockchain developer who developed his interest in cryptocurrencies while his post-graduation. He is a keen observer of details and shares his passion for writing along with being a developer. His backend knowledge about blockchain helps him give a unique perspective to his writing
