Ethereum (ETH) has seen a steep decline since Saturday, falling from the $1,838 line to the current level of $1,738 while XRP traded sideways. This has raised concerns among Ethereum market investors and traders.
However, experts and analysts believe that the recent release of the Hinman documents on June 13 could mark a wave of relief for the price of Ethereum.
The Hinman documents refer to a series of recently made public emails and memos from former director of the Securities and Exchange Commission’s (SEC) corporate finance division, William Hinman.
The Hinman documents include a series of emails and memos from the former SEC director, who said in 2018 that Ethereum’s native token, Ether, is not a security.
Ethereum traders should keep an eye on the XRP affair
Recently, the publication of emails from former SEC official William Hinman regarding Ethereum caused a stir in the cryptocurrency community. While some have claimed the documents are irrefutable proof of the cryptocurrency, others have downplayed their importance.
However, analyst Adam Cochran has argued that the documents are a nuance that puts current SEC Chairman Gary Gensler in a corner.
Hinman’s speech attempted to clarify the SEC’s position on digital assets, such as ETH and XRP, and their relationship to security regulations. In his speech, Hinman went beyond the scope of the Howey test and attempted to understand the nuanced intent of users versus investors. He also questioned the concept of morphing, or whether something can be a security and later not be a security.
The SEC staff comment specifically told him that they wanted to pivot to discussing “what is a security” rather than the idea of morphing. And that their concerns stemmed from the differences in implication between the Securities Act and the Exchange Act.
Hinman specifically drew attention to the idea that “promoters” have a very specific point of legal analysis – and that even a coordinated group of actors working on something would not rise to the level of being considered the promoter if their efforts were not essential.
The Ethereum project, which came after a meeting with Ethereum founder Vitalik Buterin and his attorneys, noted that Ethereum was not a security at this time and secondary sales were not causing issues. related to securities law – only issues related to exchange law and commodity law.
According to Cochran, this footnote is incredibly important because it notes that the SEC internally considered secondary sales and not sponsor sales at the time.
Additionally, Cochran thinks the documents are damning for Gensler’s position because they acknowledge the idea of ”reverse morphing” of an asset becoming a security. Suppose the SEC wanted to argue that Ethereum is a security today. In this case, they must acknowledge the idea of ’morphing’, prove that the developer is responsible for all secondary sales of an asset, and break any precedent for horizontal and vertical similarity.
Cochran further asserted:
For Gary to conclude that Ethereum proof-of-stake is a security, he would have to both fight a landslide on the most contentious part of Howey’s analysis — and embrace the idea that the status of securities can change. over time with decentralization.
Overall, many market analysts believe that the disclosure of the Hinman documents could increase the price of Ethereum in the short term. In effect, this removes some of the regulatory uncertainty surrounding Ethereum and could increase investor confidence in the cryptocurrency.
Featured image from Unsplash, chart from TradingView.com