JP Morgan Weighs In On Hinman Documents

June 19, 2023 7:48 am Comments

JP Morgan has weighed in on the newly released Hinman documents.

In a recent research report JP Morgan analysts claimed the recent revelations of the Hinman documents “boost ETH.”

The JP Morgan analysts wrote, “The Hinman documents are likely to influence the direction of the current U.S. congressional effort to regulate the crypto industry in a way that ether would avoid being designated as a security.”

The analysts continued “The easiest solution for Congress would be to put ether in the same category as bitcoin (BTC), and regulate it as a commodity under the oversight of the CFTC.

It was also suggested by the analysts that a new “other category” could be used for other cryptocurrencies that are decentralized enough to not be regarded as securities.

Coin Desk shared these details:

The release of the Hinman papers last week in the U.S. Securities and Exchange Commission’s (SEC) case against Ripple is a boost to ether (ETH), and is likely to trigger a move to more decentralization in the crypto market, JPMorgan (JPM) said in a research report Thursday.

Emails tied to former Director of Corporation Finance William Hinman’s 2018 speech saying ether did not look like A security were published last Tuesday by Ripple in its defense against an SEC lawsuit.

Senior leadership at the SEC did not rank ether as a security in 2018, the report noted, and SEC officials acknowledged that the “fact that tokens on a sufficiently decentralized network are no longer securities creates a regulatory gap.”

“The speech acknowledges that there is an other category,” analysts led by Nikolaos Panigirtzoglou wrote, adding that “it is not a security because there is no controlling group (at least in the Howey sense) yet there may be a need for regulation to protect purchasers.”

Panigirtzoglou was referring to the Howey Test, which is used to determine which transactions qualify as investment contracts and thus subject to U.S. securities laws. An asset can be classed as a security if there is an investment of money in a common enterprise and the expectation of profits derived from the efforts of others.

The Digital Asset Investor shed some light on why JP Morgan might be big on ETH:

Per Coinpedia:

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).

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