On March 12, the cryptocurrency and blockchain legislative advocacy group Coincenter published correspondence between the Securities and Exchange Commission (SEC) chairman Jay Clayton and representative Ted Budd. The letter explains that Clayton and the SEC’s staff analysis confirms that Ethereum and similar cryptocurrencies are not subject to securities laws.
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SEC Chairman Jay Clayton Agrees That Certain Cryptocurrencies Are Not Securities
It seems the SEC chairman Jay Clayton agrees with the agency’s head of the Division of Corporate Finance, William Hinman. Last July, news.Bitcoin.com reported on Hinman’s opinion that that cryptocurrencies like BTC and ETH are not securities. “If the network on which the token or coin is to function is sufficiently decentralized” then the currency is likely not a security explained Hinman during the Yahoo All Markets Summit. So a few months ago, the blockchain legislative advocacy group Coincenter sent a letter co-signed by representative Ted Budd that asked the SEC chairman if he agreed with Hinman’s valuation.
“I agree with Director Hinman’s explanation of how a digital asset transaction may no longer represent an investment contract,” Clayton’s response read.
The SEC chairman’s letter continued:
If, for example, purchasers would no longer reasonably expect a person or group to carry out the essential managerial or entrepreneurial efforts. Under those circumstances, the digital asset may not represent an investment contract under the Howey framework.
Clayton Has Given His Opinion Before
Clayton didn’t mention which specific cryptocurrencies met this criterion, but Coincenter’s published blog post suggests that the letter is a confirmation that “Ethereum (and cryptos like it) are not securities.” Coincenter’s founder Jerry Brito thanked Budd for helping reach out to the SEC chairman. “Thanks to representative Ted Budd for his leadership getting regulatory clarity for cryptocurrencies,” Brito tweeted on Mondaystatements to Coincenter and representative Budd echo prior statements he made in June 2018 during an interview with CNBC. During that conversation, the chairman spoke specifically about bitcoin.
“Replace the dollar, the yen, the euro with bitcoin — That type of currency is not a security,” Clayton stated at the time. “Where I give you my money and you go off and make a venture […] and in return for me giving you my money, you say, ‘You know what, I’m going to give you a return.’ That is a security, and we regulate that. We regulate the offering of that security, and we regulate the trading of that security.”
However, Clayton had a different opinion about initial coin offerings (ICO) that have raised billions in the last few years. During a speech last December, Clayton agreed that ICOs were a novel way for entrepreneurs and other businesses to raise capital as long as they follow securities laws. “The novel technological nature of an ICO does not change the fundamental point that, when a security is being offered, our securities laws must be followed,” he said.
It seems that networks like Ethereum and Bitcoin do not fall into that category in Clayton’s eyes as they are sufficiently decentralized. Ripple may not qualify under Hinman and Clayton’s interpretation however. Ripple faces a class-action lawsuit where the plaintiffs allege XRP falls under security laws and must be regulated by the SEC’s framework.
Cryptocurrencies price prediction: Bitcoin, Ethereum & Dash – Asian Wrap 26 Feb
Bitcoin Price Analysis: BTC/USD could be heading for a deeper correction
Bitcoin’s price action has looked dire on Tuesday. The market has moved away from the highs seen on February 13th. On the Tuesday night close, if the market closes below 9,227 then we could be headed toward the 8,500 area marked on the chart.
Ethereum Price Analysis: ETH/USD bears drop price below SMA 20
ETH/USD dropped from $265.80 to $248 this Tuesday as the price continued to trend in a downward channel formation. In the process, the bears were able to conquer the critical support level at the SMA 20 curve. The 20-day Bollinger jaw has narrowed considerably to show decreasing price volatility.
Dash Price Analysis: Heavy bearish action sees DASH/USD drop below the $100-level
DASH/USD had a significantly bearish Tuesday where the price dropped from $103.70 to $95.58. The price is presently consolidating in a triangle formation and has found support on the downward trending line and is trading for $96.50.
Cryptocurrencies price prediction: Bitcoin, Ripple & Bitcoin Cash – Asian Wrap 25 Feb
Bitcoin Price Prediction: After major dip from the $10,000 level, BTC/USD tries to consolidate above $9,600
BTC/USD bears retained control of the market as the price dropped from $9,662 to $9,592.80. This follows a heavily bearish Monday, where the price plummetted from $9,971.45, following a brief flirtation with the $10,000-level.
Ripple Price Analysis: XRP/USD bears take control as price consolidates above $0.26
XRP/USD bears continued to make their presence felt as the price dropped from $0.271 to $0.2675. This follows a heavily bearish Monday where XRP/USD plummetted from $0.284 to $0.271. The price is trending in a downward channel formation, while SMA 20 acts as immediate market resistance.
Bitcoin Cash Price Analysis: BCH/USD leg to $400 cut short at $380
Bitcoin Cash losses are in tandem with the rest of the cryptocurrencies. For instance, Bitcoin is trading under $9,600 after the rejection at levels close to $10,000. Ethereum and Ripple are also languishing in selling pressure.
New Zealand Plans to Drop ‘Unfavorable’ Sales Tax Treatment of Cryptocurrencies
New Zealand’s tax authority is considering changes to its treatment of cryptocurrencies that would drop the current and controversial application of goods and services tax (GST).
The current regime sees bitcoin and other digital currencies as property, with normal rules applying. That means crypto is liable for 15 percent GST when changing hands within the country as part of a business’s operations and potentially throws up a “double taxation” problem when income tax is later applied.
Calling the situation “unfavorable,” the New Zealand Inland Revenue Department (IRD) has now suggested doing away with the GST liability for cryptocurrencies in many cases, but keeping the treatment for income tax.
In a policy issues paper made public on Monday, the IRD states:
“Because of their innovative nature, [cryptocurrencies] will often also have different features to … other investment products. This means that some existing tax rules can be difficult to apply, involve very high compliance costs or may provide policy outcomes for some crypto-assets that lead to over-taxation compared to other alternative investment products.”
The overall aim of any changes would be that cryptocurrencies should have a similar treatment to other investment products or asset classes that are “close substitutes” for the digital asset.
An issue being considered by the IRD is whether different types of token should have different tax treatments depending on how they are used. One way forward is that tokens used like currency or shares would likely not be liable to GST, while other types might see the sales tax applied.
“An advantage of this approach is that it should provide a neutral tax treatment for those crypto-assets which are close substitutes for existing financial products such as currency or shares,” the IRD says.
The tax department suggests it might still treat some tokens differently, for instance, if a token is considered to be a share “but if it does not provide an interest in a foreign company or partnership, it would still be taxed very differently to other foreign equity investments.”
Yet with thousands of tokens now available offering different use cases and features, the IRD says there may be “practical limitations” to their potential classification for tax purposes.
As such, a different approach being considered is to usher in more general changes to tax rules that are seen as throwing up “the most significant policy issues when applied to crypto-assets.”
“There appears to be a case to exclude most types of crypto-asset from the GST and financial arrangement rules by developing a broad definition of crypto-assets for this purpose,” says the IRD.
Whatever the solution, Inland Revenue recognizes that change is needed. The department says, “The current GST rules provide an uncertain and variable GST treatment making, using or investing in crypto-assets less attractive than using money or investing in other financial assets.”
Parties with an interest in the issue have until April 9 to offer their opinions on the best solution.
Australia, which had previously also imposed GST on some crypto transactions, ended the policy in October 2017. Singapore proposed the same policy change last summer.