SEC Leaves Ether Securities Column Out of eToro Case

Trading app eToro recently reached a settlement with the US Securities and Exchange Commission.

The SEC announced Thursday that eToro “agreed to pay $1.5 million to settle charges that it operated an unregistered broker-dealer and an unregistered clearing agency in connection with its trading platform that facilitated the purchase and sale of certain crypto assets as securities”.

But eToro also agreed to stop trading any cryptocurrency except Bitcoin, Bitcoin Cash and Ether.

“By removing tokens offered as investment contracts from its platform, eToro has chosen to comply with and operate within our established regulatory framework,” said Gurbir S. Grewal, director of the enforcement division of the SEC.

The settlement may provide more insight into the SEC’s thinking on cryptocurrencies. It reinforces the view of Ether as a commodity rather than a security, a key cryptocurrency issue in US cryptocurrency policy regulation.

The SEC, which regulates much of the trading on Wall Street, has had different views on different cryptos. The Commodities Futures Trading Commission (CFTC) also says that cryptocurrencies can be securities or commodities.

So what is Ether if not a security?

The “ETH is property” argument.

Under the United States tax code under the rules of the Internet Revenue Service, Ether and most cryptographically secure digital tokens are simply owned and taxed as such.

As a crypto, Ether can be classified as property under the IRS tax code. This is also Coinbase’s argument about cryptocurrencies in its case with the SEC, that cryptocurrencies are property, like baseball cards.

The “ETH is capital, sort of” argument.

Another view of Ether that is not incompatible with that of it as a commodity or property is that it is freedom of expression in the form of software, but software that does something very new in the history of the Internet.

Ether is a programmable, self-executing contract on Ethereum, an open and autonomous peer-to-peer network.

But it’s not exactly like a legal contract, although the Ethereum platform can be used to host legally enforceable smart contracts. This could be one of its main use cases.

Instead, Ether is a machine made of numbers and words that your home or business office can use to get work done. Although it is digital, it is similar to a fax machine, telephone or rolodex. Ethereum is a capital that can increase the productive possibilities of its users.

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