By CCN: Ethereum’s status as a legitimate transactional currency was confirmed once again this week - by none other than the Securities and Exchange Commission. The SEC’s recent lawsuit against Kik (KIN) details the particulars of the KIN token sale - the public phase of…
By CCN: Ethereum’s status as a legitimate transactional currency was confirmed once again this week – by none other than the Securities and Exchange Commission.
The SEC’s recent lawsuit against Kik (KIN) details the particulars of the KIN token sale – the public phase of which was carried out against ETH, as opposed to the U.S dollar.
Throughout the official court document, the SEC appears to accept Ethereum as legitimate legal tender. This adds to similar noises made by the regulatory body in 2018, when SEC officials said Bitcoin and Ethereum were clearly not securities.
The conclusion of the SEC lawsuit against Kik sums up KIN’s status as a security in the eyes of regulators. It also goes some way to confirming the SEC’s acceptance of Ether as a real currency. The lawsuit states:
“Investors’ purchases of Kin were an investment of money, in a common enterprise, with an expectation of profits for both Kik and the offerees, derived primarily from the future efforts of Kik and others to build the Kin Ecosystem and drive demand for Kin. Consequently, Kik’s offer and sale of Kin in 2017 was an offer and sale of securities.”
The document does differentiate between the presale and public sale of KIN – which were conducted with USD and ETH respectively. However, when referring to Kik’s legal repercussions for issuing its security token, Ethereum and U.S dollars are used interchangeably.
“Of the nearly $100 million in cash and Ether received by Kik, over $55 million was raised from United States-based investors… Kik’s September 2017 sale of KIN to the general public was denominated in Ether, and Kik received approximately $50 million worth of this digital asset.”
While Ethereum wasn’t the topic of discussion in the Kik lawsuit, the SEC appear to have accepted its status as a transactional currency. This adds to SEC director William Hinman’s statement from June 2018, when he said Ethereum’s decentralized structure was such that it didn’t qualify as a security.
Later in the same year, SEC chairman Jay Clayton announced that Bitcoin was not considered a security by the commission. However, he refused to shed light on the mass of altcoins which conducted ICOs in the past couple of years.
In short, only Ethereum and Bitcoin have dodged the wandering eye of the SEC at this point. Others have retroactively attempted to make amends with regulators – such as Paragon (PRG), which was ordered to issue a refund to ICO investors late last year.
If we apply the SEC’s reasoning to other altcoins, one would assume that the majority of Bitcoin forks would also avoid security status. That would cover the likes of Bitcoin Cash, Litecoin and other coins which weren’t born of an ICO, and contained no future promises of success to investors.
For the same to apply to other Ethereum-like blockchain platforms, perhaps they’ll have to prove themselves to be decentralized to a similar extent.
This article was edited by Samburaj Das.