SEC makes major Cryptocurrency Announcement – Analysts React

Today, after nearly a decade of debate, the SEC announced that both bitcoin and ether are not securities. The SEC’s head of the Division of Corporate Finance, William Hinman, delivered the news at the San Francisco Yahoo All Markets Summit earlier today, garnering excitement from the crypto market and an immediate increase in the price of most major cryptocurrencies.

Please see below quotes from industry experts on what they believe to be the broader market implications of this announcement.

Coinsource General Counsel Arnold Spencer:

Mangrove Partners Narrowly Avoids “Extinction-Level Event”

Nathaniel August's Mangrove Partners is having a rough 2020. According to a copy of the hedge fund's August update, a copy of which ValueWalk has been able to review, for the year to August 5, Mangrove Funds have returned -38%. Over the trailing 12-month period, the funds returned -44%. The S&P 500 produced a positive Read More

“This is a decision is interesting because, a year ago, the SEC couldn’t and wouldn’t have made this announcement.  The SEC’s announcement recognizes that Ether is treated differently now than a year ago, and should be regulated differently.  

The announcement reflects a deeper strategy on the SEC’s part to develop a regulatory platform and implement it.  Step by step, the SEC is giving guidance but also setting precedent. With every announcement, the SEC is rolling out a workable regulatory structure for crypto-currencies.

The SEC, better than any other federal or state regulator, is establishing a practical system of regulation.  Most states are simply doing nothing, allowing crypto businesses to operate without regulations. Most federal agencies and the State of New York issued one-time restrictive policies or licenses.  Only the SEC has made constructive, flexible progress.

Cryptocurrencies and ICOs developed so fast, no one could predict how these coins would fit into legal or market structures.  Not the companies issuing coins. Not the regulators. Now, the SEC is giving other cryptocurrencies a path toward fitting in.  Cryptos will either have to follow Ether’s example and decentralize. Or find a way to fit within the existing securities regs.

The unanswered question is, ‘What do we do with the coins that have the characteristics of securities?’  Will the SEC continue to take a practical approach, perhaps try some sort of retroactive registration or an amnesty program?  That’s the hard question – how do you protect investors without hurting investors? How do initiate regulations of security coins without killing the security coins?”

Kowala CEO Eiland Glover:

“The SEC’s ruling that Bitcoin and Ethereum aren’t securities comes as a giant relief. Clear guidelines from regulators are part of what drives economic growth in the US. Without this ruling, all crypto-trading until now would be illegal, prices for Ether would plummet, and the pace of US crypto innovation would slow — maybe even go offshore. If you’re an entrepreneur or just someone who loves crypto, you can only cheer when the SEC makes explicit rules about what’s a security and what’s not. It’s rulings like this that allows entrepreneurs to comply with the full spirit of the law and still expand the economy.”