JPMorgan Report: Hinman Documents in SEC-Ripple Case Strengthen Ether
JPMorgan believes the release of the Hinman documents in the ongoing legal battle between Ripple and the US Securities and Exchange Commission could benefit ethereum (ETH).
In a Thursday research report, JPMorgan analyst Nikolaos Panigirtzoglou wrote that the internal SEC messages related to a 2018 speech by former Director William Hinman suggest ether did not look like a security.
The report said that the SEC officials acknowledged back then that the “fact that tokens on a sufficiently decentralized network are no longer securities creates a regulatory gap.”
“The speech acknowledges that there is an other category,” Panigirtzoglou wrote, adding that “it is not a security because there is no controlling group (at least in the Howey test) yet there may be a need for regulation to protect purchasers.”
The Howey test is a legal test used in the United States to determine whether a transaction qualifies as an investment contract and, thus, is considered a security under federal law.
JPMorgan analysts said that the SEC's decision not to take action against ether so far this year while targeting other crypto tokens could be explained by the Hinman documents.
According to the analysts, the Hinman documents could influence the direction of the ongoing US congressional effort to regulate the cryptocurrency industry in a way that allows ether to avoid being designated as a security.
The easiest solution for Congress would be to regulate ether in the same manner as bitcoin (BTC), and oversee it as a commodity under the Commodity Futures Trading Commission (CFTC), JPMorgan said.
The bank said that a new "other category" could be introduced for ether and other cryptocurrencies that are decentralized enough to avoid being classified as
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