Hinman Documents’ Release in SEC-Ripple Case: JPMorgan Highlights Potential Benefit to Ether
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The Ripple versus SEC legal battle has entered its final stage, and there is a lot of buzz surrounding the recent release of the Hinman Documents. These documents hold significant importance for the case since the SEC initially requested them to be sealed and undisclosed. However, the judge denied this motion, and the documents were finally made public on June 12.
Now that these Hinman Documents are out, everyone’s on the edge of their seats, waiting to see how they’ll impact the case. Various experts in the industry have shared their opinions on this matter. In a recent report by JP Morgan, it was stated that these documents are likely to amplify the trend among major cryptocurrencies to strive for greater decentralization and adopt a similar approach to Ether.
JPMorgan Report Highlights Impact of Hinman Papers on Ether and Decentralization
According to a research report by JPMorgan, the unveiling of the Hinman papers, which occurred as part of Ripple’s defense against the SEC lawsuit, has a positive impact on the future of ether and holds potential consequences for the overall decentralization of the cryptocurrency market.
These papers contain emails related to the 2018 speech by former Director of Corporation Finance, William Hinman, where he stated that ether did not appear to be a security. JPMorgan’s report highlights that senior SEC officials did not categorize ether as a security in 2018, and there is an acknowledgment within the SEC that tokens operating on a sufficiently decentralized network may no longer be considered securities, thereby creating a regulatory gap.
Hinman Speech’s Recognition of a Distinct Category Within Cryptocurrency
JPMorgan analysts, led by Nikolaos Panigirtzoglou, have emphasized in their report that the Hinman speech acknowledges the existence of a distinct category within the cryptocurrency market. They clarify that this category does not meet the criteria of traditional security based on the Howey Test, which determines whether a transaction qualifies as an investment contract subject to U.S. securities laws.
According to the Howey Test, security arises when there is an investment of money in a common enterprise with the expectation of profits derived from the efforts of others. However, the analysts highlight that, despite not falling under the definition of security, there may still be a need for regulatory measures to protect purchasers in this unique category.
JPMorgan Highlights Impact on Regulatory Direction and Ether’s Position
JPMorgan analysts suggest that the recent revelations from the Hinman documents could shed light on why the SEC has refrained from taking action against ether while targeting other cryptocurrencies this year.
JPMorgan suggests that by creating a specific “other category,” which includes ether and similar decentralized cryptocurrencies, Congress could avoid designating them as securities. The easiest approach for Congress would be to classify ether alongside bitcoin as a commodity, subject to regulation under the Commodity Futures Trading Commission (CFTC).
Filed under: Bitcoin - @ June 19, 2023 10:11 am