JPMorgan Chase: Hinman document may further decentralize cryptocurrencies

Author: Will Canny, CoinDesk; Compiler: Songxue, Jinse Finance

Last week’s Hinman filing in the U.S. Securities and Exchange Commission’s (SEC) case against Ripple is a boost to Ethereum (ETH) and could trigger a crypto rally, JPMorgan Chase & Co (JPM) said in a research note on Thursday. The trend towards further decentralization of the currency market.

Last Tuesday, Ripple released emails related to a 2018 speech by former corporate finance chief William Hinman, saying that ethereum does not look like a security.

The report notes that the SEC’s senior leadership did not classify Ethereum as a security in 2018, with SEC officials acknowledging that “the fact that a token on a fully decentralized network is no longer a security Regulatory gap."

“The presentation acknowledges that there are other categories,” wrote analysts led by Nikolaos Panigirtzoglou, adding, "It is not a security because there is no control group (at least in terms of the Howey test), but regulation may be needed to protect buyers. "

Panigirtzoglou refers to the Howey test, which is used to determine which transactions qualify as investment contracts, subject to U.S. securities laws. **An asset can be classified as a security if it is an investment of money in an ordinary business with the expectation of profiting from the efforts of others. **

JPMorgan said the disclosures could explain why regulators took no action against ethereum this year when they targeted other cryptocurrencies.

“The Hinman document could influence the direction of current congressional efforts to regulate the crypto industry to avoid the designation of ethereum as a security,” analysts wrote.

**The easiest solution for Congress would be to put Ethereum in the same category as Bitcoin and regulate it as a commodity under the supervision of the Commodity Futures Trading Commission (CFTC). **

JPMorgan said new “other categories” could be introduced for ethereum and other cryptocurrencies that are sufficiently decentralized to avoid being classified as securities themselves, adding that “the more decentralized a cryptocurrency is, the more decentralized it becomes.” the more likely it is to avoid designation as a security.”