Jay Clayton, chairman of the Securities and Exchange Commission, issued a statement noting staff statements solely reflect their personal opinions, and are non-binding and create no enforceable rights or obligations on the Commission. Only rules and regulations formally adopted by the Commission have the force of law, he said.
My View: A few weeks ago, William Hinman, Director of the SEC’s Division of Corporate Finance, indicated in a speech that, in his view, ether – the digital payment asset associated with the Ethereum blockchain – did not have the qualities of a security. He equated ether with bitcoin for such purposes. He enumerated a number of characteristics that, to him, would likely render a digital asset a security, applying the Howey test (click here to access the Supreme Court decision in SEC v. WJ. Howey (1946)). The significance of Mr. Hinman’s statements appears undercut by Mr. Clayton’s latest pronouncement – although it is also only a speech and not an SEC rule or regulation. (Click here for background on Mr. Hinman’s speech in the article “Anything but Sleep Inducing: SEC Corporate Finance Director Says Ether Not a Security and Canada Issues Guidance on Utility Tokens” in the June 17, 2018 edition of Bridging the Week.)