Several members of staff at the Securities and Exchange Commission (SEC) have claimed that “Bitcoin is not a security” in a letter to digital asset management firm Cipher Technologies.
The US regulator’s Division of Investment Management staff responded to Cipher Technologies’ recent statement that claimed Bitcoin was a security.
They disagreed with Cipher’s conclusion under the Howey test, which is the framework for analysing digital assets and cryptocurrencies.
The SEC wrote: “Among other things, we do not believe that current purchasers of Bitcoin are relying on the essential managerial and entrepreneurial efforts of others to produce a profit.
“Accordingly, because Cipher intends to invest substantially all of its assets in Bitcoin as currently structured, it does not meet the definition of an ‘investment company’ under the Investment Company Act and it has inappropriately filed on Form N-2.”
The regulator continued by stating that if Bitcoin was a security, “other substantial issues” would be raised as Bitcoin would demonstrate a massive “unregistered publicly-offered security”.
While the letter isn’t binding, it does indicate that the SEC’s opinion on cryptocurrencies, especially Bitcoin, is warming.
This hasn’t prevented the regulator’s ongoing clampdown on a number of unregulated ICOs from 2017, with a number of projects facing fines, penalties, and more.
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