US Congress May Introduce Ethereum With New Asset Class - JPMorgan
Date: 2023-06-19 Author: Karina Ziganova Categories: CRYPTO PAYMENTS
While market experts and ordinary community members discuss the actions of the Securities and Exchange Commission (SEC) and the controversial statements of its chairman on the status of digital assets, JPMorgan believes that Ethereum (ETH) may fall into a new category and take an intermediate position between a commodity and a valuable paper. According to the company's strategist Nikolaos Panigirtsgolow, in this case, the financial regulator will impose much fewer requirements on the second-largest cryptocurrency in terms of capitalization.
JPMorgan Strategists Link to Hinman Papers
JPMorgan's assumptions are based on the publication of the so-called "Hinman papers". In 2018, Bill Hinman, director of the SEC Corporate Finance Division, said that Ethereum is sufficiently decentralized and does not qualify as a security according to the Howey test. He expressed his position on this issue in an e-mail, which he sent to 17 addressees in the Commission.
The Hinman papers highlighted potential gaps in current regulation that the introduction of the new category could address. According to the aforementioned JPMorgan strategists, the “other category” would be more restrictive and offer more investor protection than commodity status, while being less onerous than security status
Given this context, JPMorgan is interpreting the publication of the documents as a potential reason why the SEC has had little to no involvement with Ethereum. Strategists predict that they can guide the ongoing efforts of the US Congress to regulate the cryptocurrency sector and thereby allow ETH to avoid being classified as securities.
SEC chairman has not expressed a clear position regarding Ethereum
Contrary to the position of his predecessor, the current SEC Chairman Gary Gensler has not expressed a clear position on the status of Ethereum. He previously noted that he considers most cryptocurrencies, with the exception of bitcoin (BTC), as securities - but despite this, the Commission did not include ETH in the recently published list of assets that fall under this classification.
Members of the crypto community, meanwhile, are discussing with might and main old videos featuring Gensler, in which he claims that Ethereum, along with Bitcoin, Bitcoin Cash (BCH) and Litecoin (LTC), do not belong to securities.
As the cryptocurrency market evolves and attracts more and more attention from regulators, the proposal to introduce a new category highlights the need for flexible legislative measures. However, whether Congress will actually allocate a new category for Ethereum remains to be seen.
