Ethereum is a security. To be or not to be?
Coin of the day is Ethereum
Recent sell-off on ETH happened ahead of the regulators meeting where authorities will discuss whether Ethereum and Ripple fit the concept of securities. Ethereum, in this case, was the initial cause of the meeting, Ripple appeared only in recent announcements, and it seems that discussion conceptually will affect all cryptocurrencies. The meeting was not announced like some official action, and could even not bring any particular statements afterward. Nonetheless, the rumors after the meeting will drag a lot of attention, as it is highly important to understand the government position in this case.
Generally, all this discussion can be reduced to one idea, whether Ethereum fits Howey test (The "Howey Test" is a test created by the Supreme Court for determining whether certain transactions qualify as "investment contracts.") or not. Majority of opinions find Ethereum not fitting the test. Nonetheless, that is only one of the ideas where the discussion could go and how SEC and CFTC fill draw the future of cryptocurrencies in the USA.
What if the SEC+CFTC Decides Ethereum is a Security?
If the rhetoric after announcement will hint that the government will try to make Ethereum a security that would definitely affect the price in a bad way and cause panic and sell-off. But it is unlikely that such a statement would destroy ETH. Ultimately, it’s decentralized in its design. Sure, Vitalik is a clear figurehead, and the way that decisions are implemented on the protocol are arguably centralized (that’s a debate for another day), but the fact remains that Ethereum, at this point, can’t be shut down. Most likely, if there is a statement, it will not carry a specific character.
What if the SEC+CFTC Decides Ethereum is not a Security?
If statement will declare that Ethereum will not be treated as a security. It’s possible that a ‘No, Ethereum is not a security’ consensus has already been priced into Ethereum via its massive run that it just went on. Nonetheless, potential exuberance and overall heightened sentiment that would occur as a result of that information though could send Ethereum skyrocketing up as well.
What Ethereum team thinks
Ethereum co-founder Joseph Lubin told TheStreet this week that the team creating the platform and technology was concerned about that scenario early on, which would keep unregistered investors away:
“We spent a tremendous amount of time with lawyers in the U.S. and other countries, and are extremely comfortable that it is not a security; it never was a security”.
Ethereum Foundation ‘Extremely Comfortable’ ETH Is Not A Security, Co-Founder Lubin Says.
How the decisions will affect ERC20 tokens
The most healthy idea on the ERC20 tokens sounds like that:
ERC20 tokens use only Ehtereum technology and should be considered on their own. As some of the tokens could fit the Harvey rule and others are clearly not fitting it.
Technicals
Recent sell-off send ETHBTC down below the 0.08 support from the peak at 0.0845. The pair picked up on the 0.075 level and now heading upwards, recently broke above the 0.077. The fall did not reach a Bullish Trend Line, which supports the monthly uptrend bias, so the coin still looks bullish. Fall below the 0.07 level which coincides with 100-days EMA would change the outlook of ETH to bearish. A breakthrough above the 0.08 level would be a bullish sign, as well as further breakthrough above 0.0845.
In sum
It is worth paying close attention to that meeting results. From the technical point, ETHBTC stays in the bullish bias even after the recent fall, but we do not recommend to buy it in a hurry. It is better to stay out of the market until there is at least some clarity on this issue.
Recent sell-off on ETH happened ahead of the regulators meeting where authorities will discuss whether Ethereum and Ripple fit the concept of securities. Ethereum, in this case, was the initial cause of the meeting, Ripple appeared only in recent announcements, and it seems that discussion conceptually will affect all cryptocurrencies. The meeting was not announced like some official action, and could even not bring any particular statements afterward. Nonetheless, the rumors after the meeting will drag a lot of attention, as it is highly important to understand the government position in this case.
Generally, all this discussion can be reduced to one idea, whether Ethereum fits Howey test (The "Howey Test" is a test created by the Supreme Court for determining whether certain transactions qualify as "investment contracts.") or not. Majority of opinions find Ethereum not fitting the test. Nonetheless, that is only one of the ideas where the discussion could go and how SEC and CFTC fill draw the future of cryptocurrencies in the USA.
What if the SEC+CFTC Decides Ethereum is a Security?
If the rhetoric after announcement will hint that the government will try to make Ethereum a security that would definitely affect the price in a bad way and cause panic and sell-off. But it is unlikely that such a statement would destroy ETH. Ultimately, it’s decentralized in its design. Sure, Vitalik is a clear figurehead, and the way that decisions are implemented on the protocol are arguably centralized (that’s a debate for another day), but the fact remains that Ethereum, at this point, can’t be shut down. Most likely, if there is a statement, it will not carry a specific character.
What if the SEC+CFTC Decides Ethereum is not a Security?
If statement will declare that Ethereum will not be treated as a security. It’s possible that a ‘No, Ethereum is not a security’ consensus has already been priced into Ethereum via its massive run that it just went on. Nonetheless, potential exuberance and overall heightened sentiment that would occur as a result of that information though could send Ethereum skyrocketing up as well.
What Ethereum team thinks
Ethereum co-founder Joseph Lubin told TheStreet this week that the team creating the platform and technology was concerned about that scenario early on, which would keep unregistered investors away:
“We spent a tremendous amount of time with lawyers in the U.S. and other countries, and are extremely comfortable that it is not a security; it never was a security”.
Ethereum Foundation ‘Extremely Comfortable’ ETH Is Not A Security, Co-Founder Lubin Says.
How the decisions will affect ERC20 tokens
The most healthy idea on the ERC20 tokens sounds like that:
ERC20 tokens use only Ehtereum technology and should be considered on their own. As some of the tokens could fit the Harvey rule and others are clearly not fitting it.
Technicals
Recent sell-off send ETHBTC down below the 0.08 support from the peak at 0.0845. The pair picked up on the 0.075 level and now heading upwards, recently broke above the 0.077. The fall did not reach a Bullish Trend Line, which supports the monthly uptrend bias, so the coin still looks bullish. Fall below the 0.07 level which coincides with 100-days EMA would change the outlook of ETH to bearish. A breakthrough above the 0.08 level would be a bullish sign, as well as further breakthrough above 0.0845.
In sum
It is worth paying close attention to that meeting results. From the technical point, ETHBTC stays in the bullish bias even after the recent fall, but we do not recommend to buy it in a hurry. It is better to stay out of the market until there is at least some clarity on this issue.
Maybe some news or hints about meeting consensus will leak to the press in a while, but for now there will be no significant effect.