An old speech by Ethereum (ETH) co-founder Vitalik Buterin surfaced at a time when the head of the US Securities and Exchange Commission (SEC) warns that Initial Coin Offerings (ICOs) are securities.
Vitalik Buterin, co-founder of Ethereum. Source: a video screenshot edited by Cryptonews.com
Cryptoverse residents shared an old video by Buterin that was captured at the Texas Bitcoin Conference in March 2014 or a few months before the Ethereum ICO. In the video, Buterin discusses what ETH represents in the Ethereum ecosystem and describes it as “a kind of reserve currency of the network”. However, he went on to explain that the sale of ETH had to be delayed for a number of reasons, including a legal one, saying:
“So from an organizational point of view, our current situation is that we have a legal entity in Switzerland. And the reason we consider Switzerland a jurisdiction is that Switzerland is best known for its very friendly banking laws, making it a lot easier to do everything related to innovative finance [there] than in something like the United States or even Canada. “
He added that the team also looked at Panama, which “has some similar characteristics” but ultimately chose Switzerland because it is “more stable”.
Bitcoiners quickly recognized this.
However, it may not be that simple.
Andrew M. Bailey, Associate Professor at Yale-NUS College, brought back another old statement, this time from crypto researcher Hasu, who wrote in a 2018 blog post:
“While most people have no doubt that the Ethereum presale was likely a securities issue, they argue that it is now decentralized enough to no longer live up to that bill.”
According to Hasu, ICOs in general and the structure of the Ethereum pre-sale in particular encourage insider investments.
Hasu’s article was a complement to another published earlier this year by attorney Preston Byrne stating that “Whether Ether and / or Ripple are actually investment contracts under the SEC vs. WJ Howey test is now one Public Interest Issue, with the hero of the financial services culture, Gary Gensler arguing that ether could be classified as a security (actually an “investment contract”), and Peter van Valkenburgh of the Coin Center arguing that it shouldn’t, since a sufficient degree of “decentralization” a cryptocurrency from regulation. “
Byrne added that he agreed with Gensler on this point and also wrote that “unless we can show that this ether has been sold to the broader market, […] Ethereum isn’t as decentralized as we hope. ”
This “is likely to have legal ramifications and is more likely to undermine the” decentralization defense “presented to regulators by industry lobbyists”.
All of these old arguments were unearthed at a time when a number of regulators and lawmakers are calling for and working towards stricter regulations for the crypto sector. Reportedly, Gensler recently asked SEC officials to investigate “a number of potential policy changes” with “at least seven SEC initiatives” examining ICOs, among other things.
“I think former SEC chairman Jay Clayton said it well when he testified in 2018,” To the extent that digital assets like [initial coin offerings, or ICOs] are securities – and I believe every ICO I’ve seen is a security – we have jurisdiction and our state securities laws apply, ”Gensler said in his speech this week, adding that he agreed with Clayton.
Blockchain company Ripple was also included in this conversation, as the company and its two top executives have been fighting the SEC for months in court over claims by the regulator that the Ripple-linked XRP token is an unregistered security.
In fact, one of Ripple’s arguments in this case is that the regulator said that ETH is not a security. Former head of the agency’s corporate finance department (2017-2020), William Hinman, gave a famous speech in 2018 in which he said that ETH and Bitcoin (BTC) are not securities and therefore are not under SEC jurisdiction.
But the SEC said it wasn’t the same in the case of XRP.
Meanwhile, Ripple CEO Brad Garlinghouse claimed today:
“A few weeks ago, Hinman filed an affidavit in court stating that the SEC has still” not taken a position or opinion on the status of ETH … so how is the market supposed to be clear ?! “
His comments are in turn a reaction to the recent speech by Gensler, for which Michael Arrington, founder of Arrington XRP Capital, TechCrunch and Crunchbase, suggested “at least clarify about ETH”.
Cryptonews.com has reached out to the Ethereum Foundation for a comment.
At 14:06 UTC, ETH is trading at $ 2,614, up nearly 4% in one day and 14% in a week.
Here is Vitalik Buterin’s full presentation at the 2014 Texas Bitcoin Conference in Austin, Texas:
– Bitcoin ‘Innovation Is Real’ & 9 other key takeaways from the SEC chairman’s speech
– SEC Coinschedule Settlement opens old crypto-securities wounds
– Ethereum Hope # 1559: What It Does and What It Doesn’t
– Pantera CEO cuts Bitcoin price forecast for 2021 and sees ETH excess performance
– “Fiat-like” proof-of-stake chains favor centralization and rich players
– The Ethereum Economy is a house of cards
– Why Ethereum Is Far From “Ultrasonic Money”
– MEV is harming Ethereum users and it could be here for some time