Ether, the cryptocurrency powered by the Ethereum blockchain, spiked Thursday after a Securities and Exchange Commission official said the agency did not view the crypto as a security.
Speaking at Yahoo Finance’s All Markets Summit, William Hinman, the SEC’s director of corporate finance, said the agency did not view bitcoin or ether as securities. Such a designation would require certain exchanges that facilitate trading of the cryptos to register with the agency. Thursday’s announcement was the first time the SEC provided regulator clarity on specific coins.
“Based on my understanding of the present state of ether, the Ethereum network, and its decentralized structure, current offers and sales of ether are not securities transactions,” Hinman said.
Bitcoin has long been viewed by market participants as a commodity, which falls under the auspices of the Commodity Futures Trading Commission. But it has been less clear whether regulators would deem ether, which some view as being more centralized than bitcoin, as a security.
During an interview with CNBC last week, SEC Chairman Jay Clayton didn’t provide additional clarity.
“I’m not going to comment on specific crypto assets and whether they are a security or are not a security,” Clayton told CNBC’s Bob Pisani.
Crypto watchers, including the trade group Coin Center, cheered Thursday’s news.
“With this guidance, the SEC is showing that taking a pro-innovation approach does not have to come at the expense of protecting investors,” the center’s executive director, Jerry Brito, said in a statement.
Ether was trading up close to 7%, at $512 a coin, just before 1 p.m. ET, according to data from Markets Insider.